The Monetary Policy Committee of the Central Bank of Turkey decided to reduce the discount rate (the rate at the weekly repo auction) from 47.5% to 45%. This is stated in the message of the Central Bank of Turkey.

“While the underlying trend of inflation declined in December, leading indicators point to an increase in January, which is in line with forecasts. This rise is mainly due to time-dependent pricing of services and backwardation. However, core goods inflation remains relatively low. Indicators for the last quarter suggest that domestic demand is at disinflationary levels,” the report said.

Although inflation expectations and price dynamics are generally improving, they still pose risks to the disinflation process, the Turkish Central Bank emphasized.

“A decisive approach to tightening monetary policy strengthens the inflation reduction process by reducing domestic demand, real appreciation of the Turkish lira and improving inflation expectations. In the future, enhanced fiscal policy coordination will also contribute significantly to this process. Tight monetary policy will be maintained until price stability is achieved through a sustained decline in inflation. Accordingly, the interest rate will be determined in such a way as to ensure the tightness required by the projected inflation rate, taking into account actual and expected inflation and the underlying trend,” the statement said.