Turkey Interest Rate

The Central Bank of Turkey left its benchmark one-week repo auction rate unchanged at 50% for the fifth consecutive decision in its August 2024 meeting, as expected by markets, to hold the terminal rate that lifted benchmark borrowing costs to their highest since 2002. The Monetary Policy Committee noted that underlying inflation measures in the Turkish economy increased slightly, as expected, but remained below the average from the second quarter amid signs that the restrictive monetary backdrop drove domestic demand to slow. Still, the Committee noted that upside risks to underlying inflation are still present amid geopolitical uncertainty and higher food and services prices, adding that another rate hike will be delivered should an unforeseen deterioration in inflation expectations be observed. The latest data showed that headline inflation slowed to 62% in July from the 2022-high of 75% in the May, well above the target of 5% but marking a second consecutive slowdown.