The Turkey’s Central Bank announced on Thursday a cut – as expected by the markets – in the official interest rate from 37% to 36%, applicable to one-week repo auction operations. The Turkish central bank also announced, at the same time, a reduction in the interest rate on overnight loans from 40% to 39% and on overnight deposits from 35.5% to 34.5%. This is the first rate cut since January.
Positive inflation figures for September
The Monetary Policy Committee, chaired by the Governor of the Central Bank of the Republic of Turkey (TCMB), Fatih Karahan, met on 22 October to decide on the benchmark interest rate to be applied by the bank, with leading analysts expecting a cut following the September CPI figures, in which inflation fell below 30% for the first time in almost five years.
Indeed, Turkey’s annual inflation stood at 29.73% last month, even below market forecasts, which had pointed to a year-on-year CPI of 30.3% for September. This is the first time inflation has fallen below 30% since as far back as November 2021.
Despite monthly fluctuations, the Turkish Central Bank noted in the statement issued today to justify its decision that recent inflation data and leading indicators confirm the downward trend in core inflation. Furthermore, data on economic activity and the limited impact of supply shocks on domestic prices indicate that domestic demand remains weak, Turkish economic news site Bloomberght reported, suggesting that the CPI will continue on a downward trend in the coming months.
The Central Bank could announce further rate cuts in December
The Turkish central bank did, however, warn of upside risks to the inflation outlook stemming from high energy prices, caused by the current geopolitical tensions surrounding Iran and the Strait of Hormuz, and therefore stated that it is closely monitoring the effects of developments in the situation on the inflation outlook.
Finally, the Turkey’s Central Bank emphasised that it will maintain a restrictive monetary policy until price stability is achieved and reaffirmed its cautious stance in the face of any risks that could push inflation upwards. The next and final meeting of the year of the Monetary Policy Committee of the TCMB – at which further interest rate cuts could be announced – is scheduled for 10 December.
VOTE
EDITORIAL TEAM
🧿 About us
.
Edited and reviewed by:
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.
…
📣 Your ADVERTISING on Hispanatolia
.
🤗 HELP US WITH A DONATION:
💗 Paypal
