Turkish TCMB Interest Rate Decision 36% vs. Exp. 36% (Prev. 37%)

Turkish TCMB Interest Rate Decision 36% vs. Exp. 36% (Prev. 37%)

In line with expectations, the 100bp step takes the one-week repo rate to 36% and keeps the TCMB on the measured easing path it has followed since inflation decelerated from its peak: a sequence of well-telegraphed, uniform steps rather than surprise moves, which is why in-line decisions of this kind have historically produced only limited repricing in Turkish rates and the lira. The cycle so far has followed the standard orthodox playbook, larger steps front-loaded early on then a downshift to smaller steps as the cycle matures, while preserving a positive ex-ante real rate cushion against still-sticky inflation expectations. Transmission runs through USD/TRY, the front of the local curve, 5y sovereign CDS, and the ex-ante real yield that underpins the lira carry trade and non-resident demand for local bonds and swaps. The distinction that matters for the next leg is step size being held, slowed, or accelerated, and the TCMB has in this cycle adjusted the step size in both directions as monthly inflation momentum has fluctuated. The tells are the MPC statement's guidance language, monthly CPI momentum and services stickiness, the ex-ante real rate buffer, and the bank's own expectations survey and inflation report. An in-line outcome leaves the burden of the next repricing on the data, not the decision.