Turkey Keeps Rate at 37% as Inflation Falls to 30.9% Amid Iran‑War Oil Surge

The bank’s decision on Wednesday marked the second straight month of unchanged policy after it lowered the rate to 37% in January from a peak near 50% in early 2024. The move was in line with market expectations.

The Turkish lira showed little reaction, trading flat at 44.92 per US dollar, and the BIST 100 index hovered around 14,342 points, essentially unchanged on the day. The index’s total market cap stands near $215 billion.

Official data from TurkStat placed annual inflation at 30.87% in March, down from earlier forecasts, with monthly inflation at 1.94%. The bank noted that the underlying trend eased but warned of a slight uptick expected in April.

Geopolitical tensions stemming from the war that began on February 28 have pushed Brent crude from roughly $70 to about $99 per barrel, raising transport, heating and electricity costs in Turkey, an energy‑import‑dependent economy. The bank said these volatile energy prices are the main driver of the current inflation outlook.

By holding rates steady, the central bank signals confidence that the disinflation trend is intact while remaining ready to tighten if inflation shows a persistent rise. The policy stance remains data‑dependent, with adjustments made meeting‑by‑meeting.

Markets will watch upcoming inflation prints, oil price movements, and any shift in the bank’s forward guidance. A sustained break above the 30% inflation threshold could prompt a policy reversal, while further oil gains may keep upward pressure on prices.