Turkish Central Bank Cuts Interest Rate by 3% to 43%

SadaNews Economy - The Turkish central bank lowered interest rates by 300 basis points to 43% on Thursday, surpassing expectations to resume the monetary easing cycle that had paused due to political turmoil earlier this year, before the markets stabilized since then and inflation continued to decline.

In a Reuters survey, 16 out of 17 analysts expected the central bank to cut the one-week repo rate, with forecasts ranging between 42.50% and 44.50%.

The Turkish central bank had raised the main interest rate to 46% in April following protests that erupted over the detention of the opposition mayor of Istanbul, the main rival of President Recep Tayyip Erdoğan, which put pressure on the economy and caused the lira to depreciate against the dollar.

The annual inflation rate in the country reached 35.05% in June, down from 35.41% in May, according to official data.

The Turkish central bank stated in a statement that "the Monetary Policy Committee has decided to cut the interest rate and will make its monetary decisions aimed at creating the necessary conditions to achieve the medium-term inflation target of 5%."

The bank confirmed that the tight monetary policy will remain in place until price stability is achieved.

The bank added that the potential impact of geopolitical developments and increasing trade protectionism "is being closely monitored."