The Central Bank cut its benchmark policy rate by 100 basis points to 36% on Oct. 22, its first monetary easing since January, in line with market expectations.
Following its seventh rate-setting meeting of the year, the Monetary Policy Committee (PPK) also lowered the overnight lending rate from 40% to 39% and the borrowing rate from 35.5% to 34.5%.
Central bank officials pointed to persistent weakness in domestic demand and declining underlying inflation as drivers for the cut.
'Despite monthly fluctuations, recent inflation figures and leading indicators confirm a decline in the underlying trend,' the PPK said in a statement. It also cautioned that elevated energy prices from geopolitical tensions pose ongoing upside risks: 'The tight monetary stance will be maintained until price stability is achieved.'
Market analysts viewed the decision as the start of a calibrated rate-cutting cycle heading into the final meeting of the year on Dec. 10.
'The central bank signaled that cuts will continue in upcoming meetings with its cautious, meeting-by-meeting approach,' said financial analyst İris Cibre Lostar.
Former central banker and economics professor İbrahim Turhan supported the move, saying, 'A 100 basis point cut was the right decision. If inflation drops to the 28% range by year-end, we could see a 150 to 200 basis point cut in December.'
Economist Güldem Atabay believes the central bank's statement does not automatically signal a rate-cutting cycle, though she expects a 100-basis-point reduction to support an economy squeezed by the fund crisis.
