Turkey’s central bank will restart one-week repo auctions at its policy rate of 37%, marking a shift from overnight liquidity measures that had pushed the lira overnight rate to 40%. The auctions were suspended in March as part of efforts to manage inflation pressures linked to the conflict in Iran, which had disrupted the central bank’s easing cycle that began in late 2024.
Inflation has since stabilized around 32%, providing scope for the bank to reintroduce longer-term funding instruments. Central Bank Governor Fatih Karahan indicated in early August that the resumption was under consideration and would proceed when conditions were appropriate.
The move reflects a recalibration of monetary policy tools, with the central bank transitioning funding from overnight mechanisms to the policy rate framework. The decision underscores efforts to balance liquidity management with inflation control amid a volatile regional backdrop.
