Turkey Holds Interest Rate Steady as Conflict Rattles Markets

The Central Bank of the Republic of Türkiye (CBRT) has announced its highly anticipated interest rate decision, keeping the policy rate at 37%.

While market analysts had previously priced in a series of rate cuts to bolster the disinflation process, the sudden outbreak of conflict among the US, Israel, and Iran has forced a dramatic shift in monetary policy.

Global Conflict Derails Rate Cut Expectations

Prior to the escalation of military tensions, financial circles were confident that the Central Bank would continue the easing cycle started in January. However, the launch of military operations against Iran has sent global oil prices into a tailspin, reigniting inflationary fears across emerging markets. Consequently, the CBRT has pivoted to a “wait-and-see” approach to mitigate the risks of energy-driven price shocks. It seems that the Central Bank of the Republic of Türkiye will adjust its interest rate depending on how the current conflict in the Middle East plays out.

Middle East War Raises Economic Risks for Türkiye

CBRT Signals Commitment to Tight Monetary Policy

In its official statement, the Monetary Policy Committee (MPC) emphasized that geopolitical uncertainties have dampened global risk appetite. The bank noted:

“As a result of geopolitical developments, uncertainties have increased, leading to a deterioration in global risk appetite and a rise in energy prices. To limit the risks these factors may pose to the inflation outlook, supportive decisions for tight monetary policy and coordinated fiscal measures have been implemented.”

The Committee further clarified that the tight monetary stance will be maintained until price stability is firmly established. Should the inflation outlook deteriorate significantly due to recent developments, the bank warned it is prepared to further tighten the policy stance to protect the national currency and market expectations.

Market Outlook: Eyes on April 22

Despite the current pause, the median expectation among economists for the year-end policy rate remains at 30%, suggesting that a gradual return to rate cuts is still on the horizon once regional tensions stabilize. All eyes are now on the next MPC meeting scheduled for April 22, 2026, which will serve as a critical barometer of the Turkish economy’s resilience amid a volatile global landscape.

Source: CBRT