Turkey Interest Rate

The Central Bank of Turkey lowered its one-week repo rate by 100 bps to 18% during its September meeting, contrary to expectations that rate would be left unchanged, claiming that the tightness of the monetary policy stance had created a larger-than-expected contractionary effect on commercial loans. Additionally, the central bank said it was committed to strengthen the macroprudential policy framework to curb personal loan growth. Policymakers noted that the increase in inflation was still transitory and driven by the rise in food and import prices, due to supply constraints and an expansion in demand following the reopening of the economy. The committee added that domestic economic activity remained strong in Q3, supported by external demand, while the quickening vaccination drive enabled a faster recovery in services, tourism and related sectors.