MNI CBRT Preview - June 2026: Set for Extended Hold
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Executive summary:
- The CBRT is widely expected to leave the one-week repo rate unchanged at 37.00%, while continuing to rely on other macroprudential tools to tighten financial conditions further if needed.
- With repo auctions still suspended, funding continues to be channelled through the overnight lending facility at 40.00%, keeping the effective rate above the policy rate.
- Following the latest bout of political turbulence, markets see little prospect of a near-term resumption of repo auctions. According to Bloomberg, 18 of 21 economists expect no change at 37.00%, while three forecast a 300bp hike.
Recent political developments further highlight the sensitivity of Turkish financial conditions to domestic shocks. The court ruling annulling the CHP’s 2023 leadership congress and reinstating Kemal Kılıçdaroğlu triggered a sell-off in Turkish assets, prompting reported FX sales of around USD 6bn by state banks to support the lira. While the scale of intervention was far smaller than the more than USD 50bn reportedly spent following the detention of Istanbul Mayor Ekrem İmamoğlu last year, it serves as a reminder of the sensitivity of Turkish markets – and therefore monetary policy – to domestic political shocks.
The combination of still-elevated inflation, raised targets, and renewed political uncertainty reinforces the case for caution. Near-term rate cuts remain firmly off the table, particularly given the CBRT’s explicit focus on maintaining disinflation momentum. At the same time, the stabilisation in markets following the initial shock, alongside already restrictive effective funding conditions near 40%, reduces the urgency for a formal rate hike. As a result, the most likely outcome is an extended policy hold, with the CBRT continuing to rely on other macroprudential tools (such as loan growth rate limits) rather than adjustments to the headline rate to steer financial conditions.
