Central Bank Cuts Interest Rates

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The Central Bank has lowered its one-week repo rate 325 basis points. The Monetary Policy Committee has decided to reduce the policy rate (one-week repo auction rate) from 19.75 percent to 16.50 percent.

The decision came in a statement from the bank's Monetary Policy Committee (MPC) meeting.

"Inflation outlook continued to improve. In addition to the stable course of the Turkish lira, improvement in inflation expectations and mild domestic demand conditions supported the disinflation in core indicators.

In August, consumer inflation displayed a significant fall with the contribution of core goods, energy and food groups. Domestic demand conditions and the level of monetary tightness continue to support disinflation. Underlying trend indicators, supply side factors, and import prices lead to an improvement in the inflation outlook.

In light of these developments, recent forecast revisions suggest that inflation is likely to materialize slightly below the projections of the July Inflation Report by the end of the year. Accordingly, considering all the factors affecting inflation outlook, the Committee decided to reduce the policy rate by 325 basis points."

In 2018, the bank held nine MPC meetings, as interest rates climbed from 8% to 24% over the course of the year.

After Central Bank Governor Murat Çetinkaya was replaced with Murat Uysal, the bank reduced the policy rate from 24 percent to 19.75 percent.

The MPC will hold its next meeting on October 24, 2019. (HA/VK)