Economy in Turkey: The Central Bank Cuts Interest Rate to 39.50 Percent

The Central Bank of Turkey (CBRT) has announced its latest monetary policy decision, cutting the benchmark interest rate by 100 basis points to 39.50%. The decision was in line with market expectations, as most economists had forecast a similar move.

In its statement, the Monetary Policy Committee noted that recent data indicate demand conditions are at a disinflationary level, but the pace of disinflation has slowed. The Bank emphasized that recent price developments—especially in food—have heightened risks to inflation expectations and pricing behavior.

Central Bank Statement Highlights

The policy rate, known as the one-week repo auction rate, has been lowered from 40.5% to 39.5%. The overnight lending rate was reduced from 43.5% to 42.5%, while the borrowing rate fell from 39% to 38%.

According to the CBRT, inflation’s underlying trend rose in September. While demand conditions remain tight enough to support disinflation, the process is progressing more slowly than anticipated. The Bank reiterated that it will maintain a tight monetary stance until price stability is achieved, supporting the disinflation process through demand, exchange rate, and expectation channels.

The statement added that future interest rate steps will be determined in line with inflation data, trends, and expectations, aiming to ensure policy tightness consistent with disinflation targets. Should inflation deviate significantly from interim targets, the Central Bank will tighten its policy stance.

The next monetary policy meeting is scheduled for December 11.

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