Published on Thursday, June 11, 2026

Türkiye | Holding the Line, Eyeing Easing

Summary

The CBRT kept rates unchanged and signaled a further reliance on macroprudential measures. Despite some moderation in demand conditions and favorable seasonal factors on inflation, domestic and external uncertainties continue to pose challenges to the disinflation process.

Key points

Key points:
The CBRT again kept the policy rate unchanged at 37%, in line with market expectations, while maintaining the cost of funding at 40%, reflecting confidence in the current policy framework and a continued prioritization of financial stability.
Domestic demand is cooling and growth is slowing, but selective credit and fiscal support suggest policymakers remain committed to maintaining growth near 3%.
While May inflation showed no further deterioration, we nowcast June monthly CPI inflation at 1.0–1.5%, with risks tilted to the downside due to favorable seasonal factors. However, persistently unanchored inflation expectations, robust inertia and uncertainties surrounding the conflict in the Middle East keep upside risks to the inflation outlook. Hence, we think there is limited room for positive surprises that could support a sustained improvement in the inflation outlook in the short term.
Given the prospect of higher energy prices for longer and potential second-round effects amid a pro-growth policy stance and high inflation expectations, we maintain our year-end inflation forecast at 30%.4. Given the prospect of higher energy prices for longer and potential second-round effects amid a pro-growth policy stance and high inflation expectations, we maintain our year-end inflation forecast at 30%.
We expect the CBRT funding rate to normalize gradually from September and converge to the policy rate in October. We expect the policy rate to remain at 37% by year-end. Depending on evolving conditions, the CBRT may pursue further rate cuts while increasingly relying on macroprudential measures, which, in our view, would further complicate the balance of risks given rising external financing requirements.