HighIV Macro Policy & Sovereign Debt22 October 2026, Thursday · 14:00 TRT (UTC+3)
CBRT cuts rates for the first time in nine months as reserves fall
The CBRT lowered its policy rate by 100 basis points from 37% to 36% on 22 October, its first cut since 22 January. Data published the same day showed net reserves excluding swaps fell by $4.9 billion in the week to 16 October, to $39.34 billion.
The Monetary Policy Committee cut the one-week repo rate to 36%, the overnight lending rate from 40% to 39% and the overnight borrowing rate from 35.5% to 34.5%. Despite annual inflation of 29.73% in September, the committee wrote that leading indicators confirm the decline in the underlying trend. The statement also noted that energy prices, pushed up by geopolitical tensions, remain an upside risk to the inflation outlook. The gap between the policy rate and annual inflation has thus narrowed from 7.27 points to 6.27 points.
The decision matched expectations: 32 of 37 economists in a Matriks survey had forecast a 100 basis point cut. In the same survey, 29 of 33 economists expect another cut at the 10 December meeting, and the median forecast for the end-2026 policy rate is 35%. The committee said it would set the size of its steps cautiously, meeting by meeting, and would tighten if the outlook deteriorated markedly and persistently. The meeting summary is due on 30 October and the Inflation Report on 12 November.
Weekly data released on the day of the decision showed gross reserves falling by $2.48 billion in the week to 16 October, to $169.1 billion; $2.42 billion of the decline came from foreign currency holdings. According to Ahlatcı Yatırım's calculation from CBRT data, net reserves excluding swaps fell from $44.23 billion to $39.34 billion, taking the loss since the start of the year to $23.26 billion. Non-residents sold $88.8 million of equities in the same week, extending their selling streak into a third week. The BIST 100 index fell 2.4% intraday on 22 October to 11,295 points.
Talay assessment
Bottom line
The CBRT delivered the expected cut, but reserve data released the same day showed how little room it has. A $4.9 billion weekly drop in net reserves excluding swaps, and three weeks of foreign equity selling, tie the size of December's step more to the currency and reserve trend than to inflation. The most likely path is a cautious cut on 10 December with reserves closely watched.
Likely effects
- Turkish liraNegativeWeeks
A rate-inflation gap of 6.27 points erodes the carry return; Commerzbank argues the cuts raise depreciation risk, while ING expects carry demand to persist.
- Reserve bufferNegative1–6 months
Net reserves excluding swaps are down $23.26 billion since the start of the year; the CBRT has less capacity to intervene in a new external shock than it had in January.
- Loans and depositsUncertain1–6 months
Banka Dünyası expects deposit and loan rates to adjust gradually in line with funding costs; a 100 basis point step will not revive domestic demand quickly.
Possibilities, ranked
- 1Cautious continuation55%
Reserve losses stop, and the CBRT cuts by 50–100 basis points on 10 December to end the year around 35%.
Watch: The 30 October MPC summary and weekly net reserves ex-swaps holding above $39.34 billion
- 2Pause30%
Reserve erosion and foreign outflows continue, and the CBRT holds rates in December.
Watch: Net reserves ex-swaps falling for two straight weeks and USD/TRY approaching 52
- 3Faster easing15%
October inflation falls markedly, carry inflows return and December brings a cut of more than 100 basis points.
Watch: October CPI, due in early November, falling below 29% year on year
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Policy rate▼ 36%
- Net reserves ex-swaps▼ −$4.9bn
- BIST 100 (intraday)▼ −2.4%
Sources
- Habertürk — Central Bank rate cut: details of the October 2026 decision
- Banka Dünyası — Central Bank rate decision announced: policy rate at 36%
- Hibya — Gross reserves fall to $169.1 billion, net reserves excluding swaps to $39.34 billion
- Cumhuriyet — CBRT reserves fall by $2.5 billion to a total of $169.1 billion
- Paratic — Foreigners sell $88.8 million of equities on Borsa Istanbul