Press Release on Interest Rates (2025-41)

No: 2025-41

July 24, 2025

Press Release on Interest Rates

Participating Committee Members

Yaşar Fatih Karahan (Governor), Osman Cevdet Akçay, Elif Haykır Hobikoğlu, Hatice Karahan, Fatma Özkul.

The Monetary Policy Committee (the Committee) has decided to reduce the policy rate (the one-week repo auction rate) from 46 percent to 43 percent. The Committee has also lowered the Central Bank overnight lending rate from 49 percent to 46 percent and the overnight borrowing rate from 44.5 percent to 41.5 percent.

The underlying trend of inflation remained flat in June. Leading indicators suggest a temporary rise in monthly inflation in July due to month-specific factors. Recent data indicate that the disinflationary impact of demand conditions has strengthened. Potential effects of the geopolitical developments and the rising trade protectionism on the disinflation process are closely monitored. Inflation expectations and pricing behavior continue to pose risks to the disinflation process.

The tight monetary policy stance, which will be maintained until price stability is achieved, will support the disinflation process through moderation in domestic demand, real appreciation in Turkish lira, and improvement in inflation expectations. Going forward, coordination of fiscal policy will contribute to this process. The Committee will determine the policy rate by taking into account realized and expected inflation, and its underlying trend in a way to ensure the tightness required by the projected disinflation path. The step size will be reviewed prudently on a meeting-by-meeting basis with a focus on the inflation outlook. All monetary policy tools will be used effectively in case a significant and persistent deterioration in inflation is foreseen.

In case of unanticipated developments in credit and deposit markets, monetary transmission mechanism will be supported via additional macroprudential measures. Liquidity conditions will continue to be closely monitored and liquidity management tools will continue to be used effectively.

The Committee will make its policy decisions so as to create the monetary and financial conditions necessary to reach the 5 percent inflation target in the medium term. The Committee will make its decisions in a predictable, data-driven and transparent framework.

The summary of the Monetary Policy Committee Meeting will be released within five working days.