Turkey Slashes Interest Rate By 100 Bps

(RTTNews) - Turkey's central bank reduced its benchmark rate by 100 basis points on Thursday as underlying trend of inflation continued to ease.

The Monetary Policy Committee of the Central Bank of the Republic of Turkey decided to reduce the policy rate to 37.0 percent from 38.0 percent.

The overnight lending rate was reduced to 40.0 percent from 41.0 percent and the overnight borrowing rate was cut to 35.5 percent from 36.5 percent.

The bank had reduced the policy rate by 150 basis points in December and 100 basis points in October.

"The Committee will make its policy decisions so as to create the monetary and financial conditions necessary to reach the 5 percent inflation target in the medium term," the bank said.

The MPC reiterated that it will make its decisions in a predictable, data-driven and transparent framework.

Consumer price inflation eased to 30.89 percent in December, which was the lowest in over four years.

Although leading indicators suggest that monthly inflation firmed in January due to food prices, the rise in underlying trend of inflation is limited, policymakers observed.

However, the MPC acknowledge that inflation expectations and pricing behavior continue to pose risks to the disinflation process.