Türkiye's central bank is likely to pursue a gradual normalization of monetary policy in the remainder of the year by lowering its effective funding costs before considering further policy rate cuts, according to economists.
Their estimates came after the Central Bank of the Republic of Türkiye (CBRT) kept its benchmark one-week repo rate at 37% on Thursday, as expected, leaving borrowing costs unchanged for a fourth consecutive meeting.
Policymakers thus maintained a cautious stance amid heightened geopolitical uncertainty and lingering inflation risks as oil prices rise again after the U.S.-Iran conflict flared up.
CBRT's interest rate corridor was also left unchanged, with the upper and lower bounds remaining at 40% and 35.5%, respectively, in line with expectations.
As a result, the bank will continue to fund through the upper bound of the corridor, as the repo window has remained closed since the start of the Middle East conflict.
