FX.co ★ Turkey Holds Base Interest Rate at 37%

The Central Bank of Turkey kept its benchmark policy rate unchanged at 37% at its March 2026 meeting, in line with the recently revised market consensus. Until the outbreak of war in the Middle East, markets had widely expected the central bank to continue its sequence of interest rate cuts. However, the conflict drove a sharp rise in energy prices and worsened the inflation outlook for major economies, prompting a shift in expectations.

This decision marked the first pause after five consecutive rate cuts and signaled that policymakers are paying close attention to the potential impact of higher energy costs on the Turkish economy. Earlier in the month, the central bank had already intervened in foreign exchange markets to stem the depreciation of the lira and suspended one-week repo auctions, a move that pushed the lira interbank overnight reference rate up by 300 basis points to nearly 40%.

The central bank maintained its view that underlying inflation remained stable as of February. It also indicated that it would first assess the economic effects of the latest geopolitical developments before determining any further policy actions.