Turkey: CBRT cuts policy (one-week repo auction) rate to 16.5% from 19.75%


  • CBRT cuts policy rate by more than expected in July. 
  • CBRT says data indicate moderate recovery in economic activity continues. 
  • USD/TRY comes under strong selling pressure with initial reaction.

The Central Bank of the Republic of Turkey (CBRT) today announced that it cut the policy rate (one-week repo auction rate) by 325 points to 16.5% from 19.75% compared to analysts estimate of 17.25%.

With the initial market reaction, the USD/TRY pair lost more than 500 pips and slumped to a weekly low of 5.6805. As of writing, the pair was trading near 5.69, losing 1% on the day. Below are some key takeaways from the CBRT's policy statement.

"Goods and services exports continue to display an upward trend despite the weakening in the global economic outlook, indicating improved competitiveness."

"Inflation outlook continued to improve. In addition to the stable course of the Turkish lira, improvement in inflation expectations and mild domestic demand conditions supported the disinflation in core indicators."

"Recent forecast revisions suggest that inflation is likely to materialize slightly below the projections of the July Inflation Report by the end of the year."

"Keeping the disinflation process in track with the targeted path requires the continuation of a cautious monetary stance."

"The Central Bank will continue to use all available instruments in pursuit of the price stability and financial stability objectives."

"It should be emphasized that any new data or information may lead the Committee to revise its stance."

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