Turkey’s central bank on Wednesday kept its benchmark interest rate unchanged at 37 percent, in line with expectations, citing ongoing geopolitical risks and uncertainty linked to the war in Iran.
The decision marked the second consecutive month in which the bank left its policy rate unchanged.
The bank had cut its main interest rate to 37 percent in January following a year that included both rate cuts and an emergency tightening phase.
Markets showed little reaction to the decision. The Turkish lira traded flat at 44.92 against the US dollar, while the benchmark BIST 100 index was also largely unchanged at 14,342 points.
In a statement accompanying the decision, the bank said the underlying trend in inflation eased in March but is expected to rise slightly in April.
Higher oil and gas prices, caused by the US-Israeli war on Iran that began on February 28, spread quickly through Turkey’s economy, raising transport, heating and electricity costs and then pushing up the price of many goods and services.
“Uncertainties stemming from geopolitical developments have led to elevated and volatile energy prices,” the bank said, adding that recent developments could have secondary effects on the inflation outlook.
Official data from the Turkish Statistical Institute (TurkStat) showed annual inflation slowed to 30.87 percent in March, with monthly inflation at 1.94 percent, both below expectations.
Oil prices, which stood at around $70 per barrel when the war on Iran began, have climbed to about $99 amid ongoing uncertainty, posing inflationary risks for energy-import-dependent Turkey.
The central bank reiterated its commitment to tight monetary policy until price stability is achieved.
“Monetary policy decisions are taken on a meeting-by-meeting basis with a prudent approach focused on the inflation outlook,” the bank said.
It added that the policy stance will be tightened if a “significant and persistent deterioration” in inflation is observed, stressing a cautious approach to upside risks.
Over the past year, Turkey’s central bank has moved from aggressive tightening to a sustained easing cycle. After raising its policy rate to around 50 percent in early 2024, the bank began cutting rates in mid-2025, reducing them step by step to 38 percent by the end of the year and further to 37 percent in early 2026 following a series of consecutive cuts.