Central Bank of Turkey Announces Rate Cut

In a significant policy shift, the Central Bank of the Republic of Turkey (CBRT) has reduced its policy rate from 47.5% to 45%. This decision comes as Turkey experiences a slight uptick in inflation rates in January, following a decrease in December, primarily influenced by the services sector's pricing dynamics.

Domestic Demand and Inflation Outlook

Despite the current inflationary pressures, domestic demand remains at levels that do not contribute to inflation, and core goods inflation continues to stay relatively low. The CBRT has reiterated its commitment to maintaining a tight monetary policy stance to achieve its medium-term inflation target of 5% and ensure price stability.

Strengthening the Disinflation Process

The bank's policy is aimed at reinforcing the disinflation process by moderating domestic demand, appreciating the Turkish lira in real terms, and improving inflation expectations. This strategic approach underscores the CBRT's dedication to navigating Turkey towards a more stable economic future.