Isbank (ISCTR) CEO Hakan Aran expects Turkey’s central bank to cut its policy rate by 350 bp at the next monetary policy committee (MPC) meeting, scheduled for July 24.

He outlined his expectation in a June 25 interview with local TV channel BloombergHT.

Turkey's official consumer price index (CPI) inflation, which stands at 35%, provides the authority with a wide margin, Aran said. As a result, a 350bp cut would not hurt the central bank’s tight stance in its monetary policy, according to the CEO.

Isbank is among largest private lenders in Turkey.

Ziraat general manager agrees

On June 28, Alpaslan Cakar, general manager of government-run Ziraat Bank, told local TV channel CBNC-e that he expected a significant rate cut on July 24.

Ziraat is the largest bank in Turkey.

Stayed put on June 19

On June 19, the MPC left its main policy rate (one-week repo) and overnight lending rate unchanged at 46% and 49%, respectively. It referred to the Israel-Iran war that was ongoing at the time.

Ahead of the decision on the rates, the authority was expected to cut its overnight rate by 150bp to fix the symmetry of its so-called interest rate corridor given that its overnight borrowing rate stands at 44.5%.

The central bank occasionally scraps or limits one-week repo auctions to push local lenders to the overnight window for the sake of additional tightening within the interest rate corridor.

Since June 13, the authority’s weighted average cost of funding has fallen to 46%. It remained at 49% between May 26 and June 5. In parallel, market rates (TLREF) also fell into the 46%s.

35% y/y in May

On June 3, the Turkish Statistical Institute (TUIK, or TurkStat) said that Turkey’s consumer price index (CPI) inflation officially stood at 35.41% y/y in May versus 37.86% y/y in April and 44% y/y at end-2024.

On July 3, the June inflation data will be released.

Below 30% at end-2025

On May 22, the central bank left its end-2025 official inflation "target" unchanged at 24% y/y in its latest quarterly inflation report.

The upper boundary of the forecast range was also kept unchanged at 29%.

The authority expected seasonally-adjusted monthly inflation figures to edge up a little in 1Q25 (due to wage hikes and new year price and fee updates) in comparison to the 2%s in 4Q24.

The expectation is, meanwhile, that the figures will fall below the 1.5%-level starting from 3Q25.

Central bank governor Fatih Karahan reiterated on May 22 that the seasonally-adjusted monthly figure will end the year at a little bit above the 1%-level.

On August 14, the central bank will release its next inflation report and updated forecasts.