Turkish Central Bank Reduces Rate Cut

(MENAFN) On Thursday, the Turkish Central Bank reduced its policy interest rate by 250 basis points, surpassing market anticipations.

The primary one-week repo rate was decreased from 43% to 40.5%, whereas analysts had predicted a 200 basis point reduction.

The bank highlighted that the fundamental inflation trend decelerated in August. Although economic growth in the second quarter exceeded forecasts, final domestic demand remained subdued.

As stated, "Recent data indicate that demand conditions are at disinflationary levels. Food prices and service items with high inertia are exerting upward pressure on inflation."

Furthermore, the bank emphasized that inflation expectations, pricing dynamics, and global factors continue to threaten the disinflation trajectory.

It added, "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. The macroeconomic framework outlined in the Medium-Term Program will contribute to this process."

Türkiye’s yearly inflation rate in August declined for the 15th month in a row to 32.95%, marking its lowest point since November 2021, though it still surpassed market projections.

Between May 2023 and the previous March, the bank had increased rates from 8.5% to 50%, maintaining them until its December meeting when it cut the rate by 250 basis points to 47.5%.

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