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Policy rate

The policy rate is the rate the CBRT applies to banks in one-week repo auctions and the main instrument of monetary policy. The policy rate is set by the Monetary Policy Committee at eight meetings a year and anchors the whole rate structure: deposit, loan and bond rates and money market fund returns follow it.
Contents
  1. 1.Key points
  2. 2.Formula / calculation
  3. 3.Interpretation
  4. 4.Pitfalls
  5. 5.Frequently asked questions

Key points

  • The central bank raises the rate to lower inflation and cuts it to support growth.
  • A hike makes the lira and deposits attractive and pressures stock and bond prices; a cut conversely supports stocks and bonds.
  • the policy rate and market rates (bonds, deposits) can diverge.

Formula / calculation

banks fund themselves from the CBRT at this rate through one-week repos; the interest rate corridor (overnight borrowing and lending) is set around the policy rate. Decisions are announced at 14:00 on meeting days and markets react to the gap between expectation and outcome. The Yatırımcı.AI CBRT rate page shows the current rate and decision history.

Interpretation

A hike makes the lira and deposits attractive and pressures stock and bond prices; a cut conversely supports stocks and bonds. When the real rate (policy rate − expected inflation) is positive, policy is considered tight.

Pitfalls

the policy rate and market rates (bonds, deposits) can diverge. Rate decisions affect the economy with a lag (6–18 months). The guidance text and the inflation report shape pricing as much as the decision itself.

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Related terms

Frequently asked questions

The policy rate is the rate the CBRT applies to banks in one-week repo auctions and the main instrument of monetary policy.

banks fund themselves from the CBRT at this rate through one-week repos; the interest rate corridor (overnight borrowing and lending) is set around the policy rate. Decisions are announced at 14:00 on meeting days and markets react to the gap between expectation and outcome. The Yatırımcı.AI CBRT rate page shows the current rate and decision history.

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