The Central Bank of the Republic of Turkey lowered the policy interest rate by 100 basis points.

TCMB's Interest Rate Cut: Policy Rate Dropped to %39.50

The Central Bank of the Republic of Turkey (TCMB) took a significant step by lowering the policy rate to %39.50. This reduction exceeded market expectations; the anticipated interest rate was previously estimated at %39.

Decisions of the Monetary Policy Committee

The Monetary Policy Committee decreased the overnight lending rate from %43.5 to %42.5, and the overnight borrowing rate from %39 to %38. This change may impact liquidity conditions and market dynamics.

Inflation Report and Future Steps

In its decision text, the TCMB highlighted the increase in inflation in September, stating, “The main trend of inflation has risen in September.” According to recent data, while demand conditions are at a disinflationary level, this process is observed to be slowing down.

The committee emphasized that it would continue to implement tight monetary policy measures until price stability is achieved, stressing that this stance would strengthen the disinflation process through demand, exchange rate, and expectation channels. It highlighted that if the inflation outlook diverges significantly from the interim targets, the monetary policy stance could be tightened.

New Steps in Credit and Deposit Markets

The TCMB announced that additional macroprudential measures could be taken to support the monetary transmission mechanism in response to unexpected developments in credit and deposit markets. It stated that liquidity conditions would be monitored closely and liquidity management tools would be used effectively.