Central Bank Takes Decisive Action

In a significant policy shift, the Central Bank of the Republic of Turkey (CBRT) announced on Thursday a reduction in its key interest rate from 46% to 43%. This decision marks a pivotal moment in Turkey's ongoing battle against inflation and economic instability.

Commitment to Price Stability

The CBRT emphasized that its tight monetary policy stance will continue until price stability is achieved. "Our approach will support the disinflation process through moderation in domestic demand, real appreciation in the Turkish lira, and improvement in inflation expectations," the bank stated. The Committee is committed to adjusting the policy rate based on realized and expected inflation trends to ensure the necessary tightness for disinflation.

Long-Term Inflation Targets

With a medium-term inflation target of 5%, the CBRT is focused on implementing measures that will steer the economy towards this goal. Despite a flat underlying inflation trend in June, early indicators suggest a temporary uptick in monthly inflation for July, highlighting the challenges ahead.