Turkey’s central bank will restart one-week repo auctions this week, marking a shift in its monetary policy stance following a prolonged pause tied to inflation pressures from regional conflict.
The central bank suspended one-week repo operations in March amid rising price risks linked to the conflict in Iran. The move had been part of efforts to tighten liquidity and curb inflation, which had pushed the lira overnight rate to a 40% limit.
Inflation has since stabilized around 32% in recent periods, providing scope for the resumption of standard funding operations. When the auctions restart, the central bank will provide liquidity at its policy rate of 37%, aligning funding operations with its established benchmark.
Central Bank Governor Fatih Karahan indicated in early August that the resumption of one-week repo auctions was under consideration, contingent on improving conditions. The decision reflects a recalibration of policy as inflation pressures ease and liquidity management returns to a more conventional framework.
