The Central Bank lowered its one-week repo rate from 46% to 43% on July 24, despite warning signs that inflation pressures persist. This was the first cut following the April rate hike.
The Monetary Policy Committee also reduced the overnight lending rate from 49% to 46% and the overnight borrowing rate from 44.5% to 41.5%. While June’s core inflation trend remained unchanged, preliminary indicators pointed to a temporary rise in July inflation due to month-specific factors.
The committee emphasized that inflation expectations and pricing behavior continue to threaten the disinflation path, even as demand conditions begin to support price moderation. It reiterated that tight monetary policy would remain in place until price stability is achieved, targeting a medium-term inflation rate of 5%.
The CHP’s Akif Hamzaçebi highlighted the statement’s cautionary tone, saying: “The rate was lowered, but inflation risks remain — and another hike may follow if needed.” He also described the 3-point cut as excessive, especially in light of the recent increase in income tax withholding rates.
