Turkey’s central bank has today lowered its key interest rate to 43%, with the three percentage point cut more than expected by analysts.
The central bank had raised its key interest rate to 46% in April after protests over the arrest of Istanbul’s opposition mayor, President Recep Tayyip Erdogan’s main rival, put pressure on the economy and caused the lira to slump against the dollar.
The monetary policy committee “has decided to reduce the policy rate the one-week repo auction rate from 46% to 43%”, the bank said in a statement.
Annual inflation was at 35.05% in June – down from 35.41% in May, according to official data.
“The committee will make its policy decisions so as to create the monetary and financial conditions necessary to reach the five percent inflation target in the medium term,” the bank said.
It said the tight monetary policy stance would be maintained until price stability was achieved.
The bank added that the potential effects of geopolitical developments and rising trade protectionism were being “closely monitored”.
