CBRT cuts rates for first time in 9 months; BIST 100 falls 3% and erases year's gains

Turkey's Central Bank, at a meeting of its Monetary Policy Committee, reduced the policy rate from 37% to 36%. This marks the first rate cut since January. The overnight lending rate was lowered from 40% to 39%, while the overnight borrowing rate fell from 35.5% to 34.5%.

Following the rate cut, the BIST 100 index on Borsa Istanbul fell 3% and dropped below 11,300 points. The index, which closed 2025 at 11,220 points, returned to that same level; it declined on three of four trading days this week and has been posting losses for investors for six weeks.

Fatih Özatay, former Vice Governor of the CBRT, reacted to the absence of a single line regarding the currency crisis in the Monetary Policy Committee's statement, asking "Is the Central Bank living in a different Turkey." Economist Güldem Atabay also emphasized that the bank did not express any concerns about financial stability.

The MPC statement indicated that the size and timing of steps would be determined in a "cautious, meeting-by-meeting" manner, signaling that a rate cut is not guaranteed at the next meeting on December 10. According to Trading Economics data, Turkey's 36% rate remains the world's second-highest after Venezuela's 58%.