TCMB Lowers Policy Rate to 40.5 Percent
The Central Bank of the Republic of Turkey (CBRT) Monetary Policy Committee (MPC) announced its September interest rate decision. The bank reduced the policy rate, also known as the one-week repo auction rate, by 250 basis points to 40.5 percent. Economists had expected a 200 basis point cut.
The median expectation for the year-end policy rate now stands at 36.5 percent. In the July meeting, the policy rate had already been lowered by 300 basis points to 43 percent. The next CBRT meeting will take place on October 23.
Details from the CBRT Statement
The Monetary Policy Committee stated that the policy rate was reduced from 43 percent to 40.5 percent. The overnight lending rate was lowered from 46 percent to 43.5 percent, and the overnight borrowing rate was cut from 41.5 percent to 39 percent.
According to the committee, inflation trends slowed in August. Growth in the second quarter exceeded forecasts, but domestic demand remained weak. Recent data show that demand conditions are at a disinflationary level. However, food prices and high-inertia service costs continue to put upward pressure on inflation. Expectations, pricing behavior, and global developments remain risk factors for the disinflation process.
Inflation and Monetary Policy Outlook
The CBRT emphasized that its tight monetary policy stance will continue until price stability is achieved. This approach will strengthen the disinflation process through demand, exchange rate, and expectation channels. The medium-term economic program is expected to contribute to this framework.
The committee also underlined that future steps regarding the policy rate will depend on inflation realizations, trends, and expectations. Decisions will be taken cautiously, on a meeting-by-meeting basis, focusing on inflation outlook. If the outlook diverges significantly from interim targets, monetary policy will be tightened again.
In case of unexpected developments in credit and deposit markets, additional macroprudential measures will be used to support monetary transmission. Liquidity conditions will be monitored closely, and management tools will continue to be applied effectively.
The committee reiterated that its policy decisions will be aimed at ensuring monetary and financial conditions that lead inflation to the 5 percent target in the medium term. All decisions will remain predictable, data-driven, and transparent.
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