Central Bank cuts policy rate by 150 bps to 38 percent

ANKARA

Türkiye's Central Bank has lowered the policy rate by 150 basis points from 39.5 percent to 38 percent.

The bank also reduced the overnight lending rate from 42.5 percent to 41 percent and the overnight borrowing rate from 38 percent to 36.5 percent.

In its statement, the bank noted that consumer inflation in November was lower than expected due to developments in food prices.

"The underlying trend of inflation declined slightly in October and November after rising in September. Third-quarter growth exceeded projections, while leading indicators for the fourth quarter suggest demand conditions continue to support the disinflation process," it said.

"Inflation expectations and pricing behaviors show signs of improvement but remain a risk factor for disinflation."

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

Central bank says will determine policy rate steps based on realized inflation, its underlying trend and expectations, ensuring the tightness required for disinflation in line with interim targets.

Step sizes are reviewed prudently on a meeting-by-meeting basis with a focus on the inflation outlook.

The policy stance will be tightened if the inflation outlook deviates significantly from interim targets.

In case of unanticipated developments in credit and deposit markets, the monetary transmission mechanism will be supported by additional macroprudential measures.

Liquidity conditions will continue to be closely monitored, with liquidity management tools used effectively.

The bank will set policy decisions to create the monetary and financial conditions needed to reach the 5 percent medium-term inflation target.