Turkey Slashes Interest Rate By 150 Bps

(RTTNews) - Turkey's central bank slashed its benchmark rate at a sharper-than-expected pace on Thursday as demand conditions continue to support the disinflation process.

The Monetary Policy Committee of the Central Bank of the Republic of Turkey, headed by Yasar Fatih Karahan, decided to cut the policy rate sharply by 150 basis points to 38.00 percent. Markets anticipated only 100 basis point reduction.

This rate cut followed the bank's previous reductions of 100 basis points in October and 250 basis points in September.

Today, the MPC also reduced the central bank overnight lending rate to 41 percent and the overnight borrowing rate to 36.5 percent.

In November, consumer inflation eased to a four-year low of 31.07 percent due to a downward surprise in food prices. The underlying trend of inflation declined slightly in October and November.

Quarterly economic growth turned out higher than projected in the third quarter, the bank observed. Policymakers noted that leading indicators for the last quarter point out that demand conditions continue to support the disinflation process. While showing signs of improvement, inflation expectations and pricing behavior continue to pose risks to the disinflation process.