Turkey’s central bank on Thursday lowered its main interest rate by 2.5 percentage points in a cut that exceeded expectations as inflation continued to ease.
The bank had raised its key interest rate to 46 percent in April after protests over the jailing of Istanbul’s powerful opposition mayor, later lowering it by three percentage points in July.
The monetary policy committee “decided to reduce the one-week repo auction rate from 43 percent to 40.5 percent,” it said in a move that lowered the policy rate by 250 basis points.
Annual inflation eased further to 32.95 percent in August, down from 33.52 percent in July, official data showed last week, fueling expectations that the bank would cut interest rates.
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“While growth exceeded projections in the second quarter, final domestic demand remained weak. Recent data suggest that demand conditions remain disinflationary,” a bank statement noted, saying food and service prices were “keeping upward pressure on inflation.”
“Inflation expectations, pricing behaviour, and global developments continue to pose risks to the disinflation process,” it said, pledging to maintain a tight monetary policy stance “until price stability is achieved.”
AFP
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