The Central Bank of Turkey (CBT) surprised markets with a 150bp cut to the policy rate, lowering it to 38% as headline inflation for November came in better than expected, ING's FX analyst Frantisek Taborsky notes.

Future Turkish rate moves to remain data-dependent

"At the last rate-setting meeting of this year, the Central Bank of Turkey delivered a larger rate cut of 150bp in comparison to the more cautious 100bp reduction at the October MPC. This followed a better-than-expected reading on headline inflation for November. The consensus was evenly balanced between 100bp and 150bp ahead of the meeting. The move pushes the policy rate down to 38% from 39.5% while the interest corridor remains unchanged at 450bp."

"While the bank emphasised that future rate decisions will remain data-driven and assessed on a meeting-by-meeting basis, it provided little clarity regarding near-term rate actions."

"In this context, inflation expectations, the outcome of the 2026 minimum wage negotiations, and the anticipated adjustment to automatic tax rates – promised by Finance Minister Mehmet Simsek – will be key for the outlook, alongside considerations regarding dollarisation and reserve levels, in our view."