Turkey Central Bank Cuts Key Rates By 100 Bps As Expected

(RTTNews) - Turkey's central bank reduced the pace of interest rate cuts on Thursday as inflation accelerated due to higher food prices.

The Monetary Policy Committee of the Central Bank of the Republic of Turkey, headed by Yasar Fatih Karahan, decided to reduce the policy rate by 100 basis points to 39.50 percent from 40.50 percent.

The committee also lowered the central bank overnight lending rate and the overnight borrowing rate by 100 basis points each to 42.5 percent and 38.00 percent, respectively.

This rate cut followed the bank's previous reductions of 250 basis points in September and 300 basis points in July.

Policymakers said the risks posed by the recent price increases, particularly in food, to the disinflation process through inflation expectations and pricing behavior have become more pronounced.

The committee cautioned that monetary policy stance will be tightened in case of a significant deviation in inflation outlook from the interim targets.

"The tight monetary policy stance, which will be maintained until price stability is achieved, will strengthen the disinflation process through demand, exchange rate, and expectation channels," the bank said.

In September, consumer price inflation rose to 33.29 percent from 32.95 percent in August, largely due to higher food prices.