Turkey's central bank cuts policy rate for first time since January

Turkey’s Central Bank (TCMB) Monetary Policy Committee cut its one-week repo auction rate, the main policy rate, by 1 percentage point, from 37 to 36 percent. The meeting was chaired by Yaşar Fatih Karahan. The committee also lowered the overnight lending rate from 40 to 39 percent and the overnight borrowing rate from 35.5 to 34.5 percent. It is the first rate cut since January.

In its press statement, the committee said recent inflation data and leading indicators confirm the decline in the underlying trend despite monthly fluctuations. It said weak domestic demand continues and that the pass-through of supply shocks to domestic prices remains limited.

The committee noted that upside risks to the inflation outlook persist, due to high energy prices amid ongoing geopolitical tensions, and said it is closely monitoring geopolitical developments. It said a tight monetary policy stance will be maintained until price stability is achieved, and that it will be tightened if there is a clear and lasting deterioration in the inflation outlook. The committee aims to bring inflation to the 5 percent medium-term target. The meeting summary will be published within five business days.