The Central Bank of Turkey has once again lowered the interest rate due to inflation.
The Central Bank of Turkey has lowered its weekly repo rate for the fourth consecutive time, responding to a slowdown in inflation and an unexpected drop in food prices. However, inflation still remains above the government's target level.
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On Thursday, the Central Bank of Turkey lowered its weekly repo rate from 39.5% to 38%. This marks the fourth consecutive rate cut, driven by favorable inflation data recorded in November.
The decision was made by the Monetary Policy Committee under the leadership of Central Bank Governor Fatih Karahan. The main reason for the rate reduction was last month's consumer inflation figures, which came in lower than expected, largely due to an unexpected drop in food prices.
In an official statement, the Committee noted: “In November, consumer inflation was below forecasts due to an unexpected decrease in food prices.” However, despite the positive data, the Committee warned that inflation expectations and pricing behavior still pose risks to the ongoing disinflation process.
Annual inflation in Turkey slowed to 31.1% in November, exceeding forecasts. According to Finance Minister Mehmet Şimşek, this level is likely to persist until the end of the year. Nevertheless, inflation remains above the government’s 2025 target of 24%. Previously, the Central Bank attributed the overshooting of the target to unexpectedly high food prices in recent months.
In October, the Central Bank had already reduced the weekly repo rate by 100 basis points to 39.5%, while maintaining an overall tight monetary policy stance.