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The Central Bank of the Republic of Turkey (CBRT) on Wednesday announced that it cut the policy rate (one-week repo auction rate) by 50 basis points to 10.75% from 11.25% as expected.

USD/TRY reaction

With the initial market reaction, the USD/TRY pair gained nearly 200 pips and rose to 6.0781. As of writing, the pair was up 0.2% on the day at 6.0720. 

Key takeaways from the policy statement

“Keeping the disinflation process in track with the targeted path requires the continuation of a cautious monetary stance.”

“Maintaining a sustained disinflation process is a key factor for achieving lower sovereign risk.”

“Monetary stance will be determined by considering the indicators of the underlying inflation trend to ensure the continuation of the disinflation process.”

“Despite signs of recovery, investment and employment remain weak.”

“Sustaining moderate course in the current account balance is considered as a crucial element of the macroeconomic policy mix.”