Interest Rate Cut Decision by CBRT

Rate cut decision from the Central Bank of the Republic of Turkey: CBRT stated that leading indicators for the third quarter pointed to some loss of momentum in economic activity and recorded a surprise interest rate cut. At the Monetary Policy Committee (MPC) meeting, the Central Bank cut the one-week repo rate, which is the policy rate, by 100 basis points from 14 percent to 13 percent, and stated in its statement regarding the decision: "Under the current outlook, the CBRT assessed that the revised policy rate level is adequate."

The Central Bank of the Republic of Turkey (CBRT) made a surprise interest rate cut by drawing attention to the loss of momentum in economic activity. CBRT cut the policy rate by 1 point to 13 percent Expectations were for the interest rate to be kept unchanged at 14 percent. In the decision text, it was stated that the rise in inflation continued to be driven by the lagged and indirect effects of energy cost increases caused by geopolitical developments, the effects of pricing formations away from economic fundamentals, and strong negative supply shocks caused by the increases in global energy, food and agricultural commodity prices. The Central Bank of the Republic of Turkey (CBRT), which anticipates that the disinflationary process will start with the restoration of the global peace environment, together with the steps taken and decisively implemented to strengthen sustainable price stability and financial stability, emphasized that leading indicators for the third quarter point to some loss of momentum in economic activity. Stating that supportive financial conditions are important for sustaining the momentum in industrial production and the upward trend in employment in a period of heightened uncertainties regarding global growth and geopolitical risks, the CBRT underlined that the revised policy rate level is adequate under the current outlook.