Central Bank cuts policy rate by 100 bps to 39.5 percent
ANKARA
The Turkish Central Bank on Oct. 23 lowered its policy rate by 100 basis points, matching market forecasts.
The benchmark one-week repo rate was lowered from 40.5 percent to 39.5 percent.
The bank said the underlying trend of inflation increased in September, and while recent data showed that demand conditions were at disinflationary levels, they also pointed to a slowdown in the disinflation process.
"The risks posed by recent price developments, particularly in food, to the disinflation process through inflation expectations and pricing behavior have become more pronounced," the Central Bank said in a statement.
"The tight monetary policy stance, which will be maintained until price stability is achieved, will strengthen the disinflation process through demand, exchange rate and expectation channels," it said.
The bank added that it will guarantee the tightness needed by the projected disinflation path in accordance with the interim targets by determining the policy rate by considering realized and expected inflation as well as its underlying trend.
"The [Monetary Policy] Committee will make its policy decisions so as to create the monetary and financial conditions necessary to reach the 5 percent inflation target in the medium term," it said.
The committee also lowered the Central Bank overnight lending rate from 43.5 percent to 42.5 percent and the overnight borrowing rate from 39 percent to 38 percent.
Türkiye's annual inflation rate in September ticked up to 33.29 percent from 32.95 percent in August, above market expectations.
From May 2023 until last March, the bank raised the rate from 8.5 percent to 50 percent and then kept it constant until its Monetary Policy Committee meeting last December, when it lowered the rate 250 basis points to 47.5 percent.
The bank cut the benchmark rate at its December, January and March meetings from 50 percent to 42.5 percent. At its April meeting, in a surprise move, the bank raised the rate 350 basis points to 46 percent, and left it unchanged at the June meeting, before slashing it 300 basis points to 43 percent at the July meeting.
At its August meeting, the bank lowered the rate by 250 basis points to 40.5 percent. surpassing estimates.
The year’s final rate‑setting meeting scheduled for Dec. 11.
