Interest rate decision announced by Türkiye’s Central Bank

The Central Bank of the Republic of Türkiye (CBRT) decreased the policy interest rate to 39.50%.

The expectation was for the rate to be reduced to 39%.

The Monetary Policy Committee (the Committee) cut the overnight lending rate from 43.5% to 42.5%, and the overnight borrowing rate from 39% to 38%.

The following statements were made in the CBRT's decision text:

The core trend of inflation increased in September. Recent data indicate that demand conditions remain at a disinflationary level, but the disinflation process has slowed down. The recent price developments, especially in food, have clearly highlighted the risks they pose to the disinflation process through inflation expectations and pricing behavior.

The tight monetary policy stance, which will be maintained until price stability is achieved, will strengthen the disinflation process through demand, exchange rate, and expectations channels. The Committee will determine the steps to be taken regarding the policy interest rate by considering inflation realizations, its core trend, and expectations, in a manner consistent with interim targets and ensuring the necessary tightness required by disinflation. The magnitude of the steps is reviewed on meeting basis with a cautious approach, focusing on the inflation outlook. If the inflation outlook deviates significantly from the interim targets, the monetary policy stance will be tightened.

In the event of developments in the credit and deposit markets that differ from expectations, the monetary transmission mechanism will be supported by additional macroprudential measures. Liquidity conditions will be closely monitored, and liquidity management tools will continue to be used effectively.