Central Bank Decreases Interest Rate from 24 Percent to 19.75 Percent

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Chaired by Murat Uysal, the Central Bank of the Republic of Turkey (TCMB) Monetary Policy Committee convened today (July 25) and decided to cut the political interest rate, also called one-week repo rate, by 4.25 percent, thereby decreasing its from its former level of 24 percent to 19.75 percent.

Releasing a statement after its meeting, the Central Bank has indicated that the recently announced data point to a moderate recovery tendency.

As reported by the state-run Anadolu Agency, the Bank has also stated, "Goods and services exports continue to display an upward trend despite weakening in global economic outlook, indicating improved competitiveness."

"In particular, strong tourism revenues support the economic activity through direct and indirect channel", the Bank has indicated further.

Underlining that the recovery in inflation outlook is still continuing, the Bank has also stated that the inflation rate will drop below the current forecasts.

Interest rate hike on September 14, 2018

After the Turkish Lira (TRY) suffered a serious depreciation and the inflation rate increased considerably, the Central Bank increased the political interest rate from 9.25 percent to 16.50 percent on June 1, 2018. It increased it further to 19.25 percent one week later.

As the depreciation in TRY could not be prevented, the Bank increased the interest rate by 625 points to 24 percent on September 14.

The annual inflation was measured as 25.24 percent last October, hitting a 15-year high. Since then, inflation rate has been gradually decreasing. As of June 2019, the annual inflation rate is 15.72 percent.

The next meeting of Central Bank Monetary Policy Committee will be held on September 12, 2019. (HA/SD)