Turkey's central bank keeps its policy rate at 37% as the Iran war slows disinflation

Turkey's central bank has kept its easing cycle on hold, leaving the policy rate at 37 percent, the highest among G20 economies. It has now held for three straight meetings since March, as the energy price shock from the Iran-US war has delayed the fall in inflation. Annual inflation, which had eased from a peak near 85 percent to around 32 percent, ticked back up, rising from 30.9 percent in December 2025 to about 32.4 percent in April 2026. In its mid-May quarterly report the bank raised its end-2026 inflation forecast to 24 percent from 16 percent, calling the war's short-term effect "pronounced." Governor Fatih Karahan said in mid-July that disinflation was "on course," but that the bank would wait for the July inflation reading and greater clarity on the war before resuming rate cuts. Turkey imports roughly 25 percent of its gas from Iran, leaving it exposed to the region's energy tensions. The lira traded around 47 to the dollar at the end of the week.