The Turkish Central Bank announced a further cut, this time of 250 basis points, leaving its benchmark one-week interest rate at 40.5% following positive CPI data in August.
As reported by Turkish media, the Monetary Policy Committee of the Central Bank of the Turkish Republic (Türkiye Cumhuriyet Merkez Bankası, or TCMB) cut on Thursday its benchmark one-week repo rate by 250 basis points to 40.5%; at the same time, it also lowered the overnight lending rate from 46% to 43.5%, and the overnight borrowing rate from 41.5% to 39%.
The rate cut announced in the last hours by the TCMB was in line with forecasts made by analysts and markets, which had anticipated a gradual lowering of interest rates in Turkey due to good inflation data. The Turkish Central Bank itself cited the positive “underlying inflation trend in August” while reasoning its decision, as well as that “Turkey’s GDP growth exceeded expectations in the second quarter, although final domestic consumption remained weak”.
Nevertheless, when explaining the reasons behind this further interest rate cut, the Turkish Central Bank noted that food prices and services with high inertia “are exerting upward pressure on inflation”, and therefore “inflation expectations, price behaviour and global developments continue to pose a risk to the disinflation process”.
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Pablo Gómez is a specialist in Turkey and has been editor-in-chief of Hispanatolia since 2011. He has been analysing current affairs and geopolitics in Turkey and the surrounding region since 2006.
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