Turkey Central Bank Cuts Key Rate to 39.5% Amid Inflation Risks

Turkey's central bank has slowed the pace of its interest rate cuts, reducing the policy rate by 100 basis points to 39.5 percent amid rising inflation risks, particularly due to higher food prices. This move follows previous cuts of 250 basis points in September and 300 basis points in July, reflecting a cautious approach to the ongoing disinflation process. The Monetary Policy Committee highlighted that inflation accelerated in September, with underlying inflation trends increasing and demand conditions supportive but showing signs of a slowdown in disinflation. The central bank emphasized maintaining a tight monetary policy stance until price stability is firmly established and signaled readiness to tighten policy further if inflation deviates significantly from targets. Despite these rate cuts, Turkey's annual inflation surged to 33.29 percent in September, surpassing expectations and prompting predictions of a slower easing cycle. The central bank reaffirmed its commitment to a 5 percent medium-term inflation target and indicated future decisions will be made transparently, data-driven, and predictably.