Turkey: CBRT cuts policy rate by 200 basis points to 16% vs. 17% expected
|The Central Bank of the Republic of Turkey (CBRT) announced on Thursday that it lowered its policy (one-week repo) rate by 200 basis points to 16% from 18%. The market expectation was a rate cut of 100 basis points to 17%.
Market reaction
With the initial market reaction, the USD/TRY pair show higher and was last seen gaining 2.5% on the day at 9.4440.
Key takeaways from policy statement as summarized by Reuters
"Supply-side transitory factors leave limited room for the downward adjustment to the policy rate."
"Assessed that inflation effects are due to transitory factors."
"Tight policy started to have a higher than envisaged contractionary effect on commercial loans."
"Will use decisively all available instruments until strong indicators point to a permanent fall in inflation."
"Stability in the general price level will foster macroeconomic stability."
"Leading indicators show that domestic economic activity remains strong, with the help of robust external demand."
"Demand for durable consumer goods slows down, recovery is observed in non-durable consumer goods."
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