Turkey Rates and the CBRT: Lira, Reserves, Inflation — 2026-09-10

Top developments

CBRT Set to Hold Policy Rate at 37% Amid Global Yield Pressure

The CBRT’s Monetary Policy Committee (PPK) meets today, September 10, with consensus among analysts and local media pointing to a hold on the one-week repo auction rate at 37%. This decision follows the bank’s recent admission of a "partial failure" in disinflation efforts and its upward revision of the year-end inflation forecast to 28.4%, driven partly by Middle East conflict impacts and oil price shocks. Major banks like Citi and Morgan Stanley anticipate the hold, with Morgan Stanley projecting that any potential rate-cutting cycle may not begin until October, citing stubborn inflation and global interest rate trends.

Inflation Cools to 31.51% in August but Remains Elevated

Turkey’s annual consumer price index (CPI) inflation eased to 31.51% in August 2026 from 31.75% in July, marking the lowest reading since March and slowing for the third consecutive month. The moderation was primarily driven by food and non-alcoholic beverages, where inflation dropped to 33.79% from 37.53% in July. Despite this cooling, the CBRT’s revised outlook suggests that disinflation will be slower than initially hoped, keeping the policy rate elevated to anchor expectations.

Reserves Hit $188.2 Billion as KKM Unwind Completes

Vice President Cevdet Yılmaz announced that the foreign-exchange protected deposit scheme (KKM) has been fully terminated, with total reserves reaching $188.2 billion as of August 28, 2026. While gross reserves saw a slight weekly decline of 0.1% to this level, net reserves excluding swaps have stabilized above key thresholds, providing a buffer against external shocks and supporting the lira’s managed depreciation path.

Local view

Local financial media highlight the tension between the government’s growth aspirations and the CBRT’s strict monetary stance. Dunya Gazetesi reports that global bond sell-offs are redirecting funds toward emerging markets like Turkey, attracted by high real yields, which strengthens the case for maintaining current rates. Meanwhile, Daily Sabah emphasizes the government’s commitment to continuing disinflation "without interruption" despite the higher near-term inflation outlook, framing the current high rates as a necessary "bitter medicine" for long-term stability.

Context & numbers

• Policy Rate: 37.00% (One-week repo auction rate); Overnight lending rate: 40.00%; Overnight borrowing rate: 35.50%.
• Inflation: August 2026 Annual CPI: 31.51%; Year-end Forecast: 28.4%.
• Reserves: Total Gross Reserves: $188.2 billion (as of Aug 28, 2026).
• Lira: The Turkish Lira continues a managed depreciation trend, with ING analysts noting that normalizing liquidity has pushed market pricing closer to their 2026 rate view, suggesting a gradual repricing rather than abrupt shifts.

On the radar

• September 10, 2026: CBRT PPK decision announcement at 14:00 local time. Markets are watching for any subtle shifts in language regarding the pace of future cuts or the impact of global energy prices.
• October Outlook: Morgan Stanley’s forecast for a potential rate-cutting cycle beginning in October will be a key focus if the September hold is confirmed with dovish undertones.
• Global Bond Yields: Continued volatility in US Treasuries and European Bunds remains a critical external variable affecting Turkey’s risk premium and net capital flows.