Turkiye CBRT sets out inflation-focused monetary policy for 2026

The Central Bank of the Republic of Turkiye (CBRT) has outlined an inflation-centric monetary policy roadmap for 2026, reaffirming price stability as its primary objective. The Bank will continue to use all available instruments decisively, while monitoring financial stability as a supporting factor.

Under the inflation-targeting framework, the medium-term inflation target remains at 5 per cent, jointly set with the Government, with an uncertainty band of ±2 percentage points. Interim year-end inflation targets will continue to guide short-term policy, with accountability ensured through open letters and detailed explanations in Inflation Reports if deviations occur.

The one-week repo auction rate will remain the main policy instrument. Monetary policy decisions will be based on a broad assessment of inflation expectations, pricing behaviour, demand and supply conditions, credit trends, liquidity dynamics and domestic and external balances, while accounting for policy transmission lags, the CBRT said in a release.

The CBRT also highlighted its active and flexible policy management during 2025. The Bank cut the policy rate by a cumulative 500 basis points in January and March, lowering it to 42.5 per cent. At an interim MPC meeting on March 20, 2025, the CBRT raised the overnight lending rate and temporarily suspended one-week repo auctions amid market volatility.

In April, the CBRT lifted the policy rate to 46 per cent and later eased by a total of 800 basis points, ending 2025 at 38 per cent, while reinforcing macroprudential measures.

The CBRT said it will continue active Turkish lira and FX liquidity management to support monetary transmission, using a wide range of sterilisation tools. The floating exchange rate regime will be maintained in 2026, with no commitment to any exchange rate level, while ensuring orderly market functioning.

The Central Bank of the Republic of Turkiye will also continue to provide banks with FX liquidity at one-week and one-month maturities through the CBRT FX Deposit Market, with a total limit of approximately $50 billion.

ALCHEMPro News Desk (HU)