Türkiye’s central bank hikes interest to 46%, citing global economic uncertainties
Photo illustration shows Turkish lira banknotes and coins are seen in front of a digital financial board, created on April 17, 2025. (Collage by Türkiye Today)
The Central Bank of the Republic of Türkiye (CBRT) surprisingly raised its policy rate to 46% on Thursday, up from 42.5%, reversing its previous easing cycle that saw three consecutive interest rate cuts.
The bank stated that the possibility of persistent inflationary pressures has become more evident due to heightened uncertainties reflected in global market volatility.
This marks the CBRT’s first interest rate hike since March 2024, when the policy rate was raised to 50% for the first time.
According to the official Survey of Market Participants released by the central bank, most participants expected the bank to pause its rate-cutting cycle and keep the policy rate at 42.5%—a level reached after three consecutive 250 basis-point cuts since December.
The CBRT Monetary Policy Committee (MPC) also decided to increase the overnight lending rate from 46% to 49% and the overnight borrowing rate from 41% to 44.5%.
Meanwhile, the bank also announced that it has decided to resume one-week repo auctions, which had been suspended on March 20, 2025.
Türkiye maintains tight monetary stance
In its policy statement, the committee emphasized that the downward trend in inflation continued for the 10th consecutive month in March, with the annual rate falling to 38.1%. While core goods inflation is expected to rise slightly in April because of recent financial market developments, services inflation is projected to remain stable.
Despite some deceleration in the first quarter, domestic demand remains above projections, limiting the disinflationary impact.
The committee also highlighted that inflation expectations and pricing behavior continue to pose risks to the disinflation outlook, along with the potential impact of rising global protectionism through channels such as global economic activity, commodity prices, and capital flows.
The CBRT reiterated its commitment to maintaining tight monetary conditions until a sustained decline in inflation is achieved. It added that future rate decisions will be based on both realized and expected inflation and will be adjusted cautiously on a meeting-by-meeting basis.
The Turkish central bank’s next monetary policy meeting is scheduled for June 19, 2025.
