The monetary policy committee (MPC) of Turkey’s central bank on January 22 cut its main policy rate (one-week repo) by 100 bp to 37% at its first rate-setting meeting of 2026. The market expectation was for 150bp.

Leading indicators suggest that monthly consumer inflation has firmed in January, led by food prices, the authority noted in its statement.

The "decision to slow the easing cycle may have been driven by an expected stalling in the disinflation process in January," Capital Economics said in a note to investors.

March 12, second rate cut of 2026

On March 12, the MPC will hold its second rate-setting meeting of the year. Another rate cut is a near certainty. Uncertainty, however, abounds as to the likely size of the cut.

As things stand, another 100-150bp cut is on the cards.

The central bank will hold eight rate-setting meetings in 2026. A 100-150bp rate cut on average per meeting, making for a combined cut of 1,000bp, would bring the policy rate down to 28% at end-2026. Such a path is to be expected.

Dashboard check

On the economic dashboard, the USD/TRY pair remains under control. Turkish borrowers’ eurobond auctions remain strong. Turkey’s five-year credit default swaps (CDS) are testing the 200-level. On the loans side, high debt rollover rates and low costs are observed.

After a local court dropped the case targeting the headquarters of the main opposition Republican People’s Party (CHP) in October, political stress that was bugging the finance industry dissolved.

Official headline inflation ends 2025 at 31%

On January 5, the Turkish Statistical Institute (TUIK, or TurkStat) said Turkey’s consumer price index (CPI) inflation officially moved down from 31.07% y/y in November to 30.89% in December.

January revision to solve "above-30%" deadlock

With the January 2026 data, the TUIK will change the base year in its official CPI series to 2025 from 2003. It will also employ wide-scope changes in its methodology and inflation basket.

The revision, which is entirely in line with Eurostat guidance, will most probably solve the "above-30%" deadlock.

Above 20% at end-2026

On February 12, the central bank will release its next quarterly inflation report, the first such report of 2026. It will include updated forecasts.

For end-2026, the authority’s “forecast range” remains at 13-19%, with the “interim target” standing at 16%.

In the February report, an upgrade for the end-2026 numbers is not anticipated, while it is almost certain that they will move up across the year.

As things stand, the realisation is supposed to come in at above the 20%-level.