MNI CBRT Preview - Mar'26: On Pause Amid Heightened Volatility

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Executive summary:

• The CBRT is widely expected to leave the one-week repo rate unchanged at 37%, reflecting heightened uncertainty stemming from the conflict in the Middle East and Turkey’s sensitivity to rising energy prices.
• The Bank’s recent backdoor tightening measures make a formal rate hike improbable as well, with policymakers likely to adopt a cautious tone amid ongoing geopolitical risks.
• Indeed, almost all analysts surveyed by Bloomberg anticipate no change to the repo rate this month.

Unsurprisingly, the conflict with Iran is likely to be the central consideration at this month’s meeting. Turkey’s sensitivity to the war reflects both energy and geopolitical factors: the country relies heavily on imported crude, while its geographic proximity to the escalation has already been evident – NATO has intercepted two Iranian missiles over Turkish airspace.

In response to the strikes, the CBRT suspended one-week repo auctions which normally provide funding at the policy rate of 37% and instead channelling liquidity through the overnight lending facility at 40%, tightening financial conditions by 300bps without a formal rate hike.