Turkey: CBRT cuts policy (one-week repo auction) rate to 14% from 16.5%

• CBRT announced a larget cut to its policy rate than expected.
• The USD/TRY pair edged higher as the TRY weakened with the initial market reaction.

The Central Bank of the Republic of Turkey  (CBRT) today announced that it cut the policy rate (one-week repo auction rate) by 250 points to 14% from 16.5% compared to analysts estimate of 15.5%.

With the initial market reaction, the USD/TRY pair advanced to a fresh daily high of 5.7730 and was last seen trading at 5.7620, adding 0.6% on a daily basis.  Below are some key takeaways from the CBRT’s policy statement, per Reuters.

“At this point, the current monetary policy stance, to a large part, is considered to be consistent with the projected disinflation path.”

“Inflation outlook continued to improve.”

“Improvement in inflation expectations and mild domestic demand conditions supported the disinflation in core indicators.”

“Recent forecast revisions suggest that inflation is likely to materialize notably below the projections of the July inflation report by the end of the year.”

“Domestic demand conditions and the level of monetary tightness continue to support disinflation.”