The Central Bank reduced its policy rate by 250 basis points to 42.5%, in line with expectations. The CBRT emphasized that the leading indicators supported the decline in inflation and highlighted the maintenance of a tight monetary policy stance.

In March, the Central Bank (CBRT) lowered its policy rate by 250 basis points from 45% to 42.5%. A 250 basis point cut was also expected in the markets. With this decision, the CBRT has now cut interest rates for the third consecutive meeting. “DECREASE IN INFLATION TO CONTINUE” The Monetary Policy Committee of the Central Bank stated in its text: “The main trend of inflation decreased in February after the increase in January. During this period, while core goods inflation maintained a relatively low trend, service inflation slowed down after the increase specific to January.

Domestic demand, although higher than forecasted in the fourth quarter, has supported the decrease in inflation at levels that are conducive. Leading indicators imply that this supportive outlook continues in the first quarter of the year.

The effects of the monetary policy stance on credit and deposit markets and domestic demand are closely monitored.

Although inflation expectations and pricing behaviors show signs of improvement, they continue to be a risk factor for the disinflation process.

“TIGHT MONETARY POLICY STANCE WILL BE MAINTAINED”

The resolute stance in monetary policy strengthens the disinflation process through the balancing of domestic demand, real appreciation of the Turkish lira, and improvement in inflation expectations.

Increased coordination of fiscal policy will also significantly contribute to this process. The tight monetary policy stance will be maintained until a permanent decrease in inflation and price stability are achieved.

In this regard, the policy rate will be determined to provide the required tightness for the expected disinflation process, considering inflation developments, the main trend, and expectations.

The Board will determine the steps to be taken regarding the policy rate with an inflation-focused, cautious, and meeting-based approach.

In the event of a significant and lasting deterioration in inflation, monetary policy tools will be effectively used.

ADDITIONAL STEPS TAKEN FOR TIGHT STANCE

In light of recent credit growth developments, additional measures have been taken to preserve macro-financial stability and support the tight monetary stance.

If there are unexpected developments in credit and deposit markets, the monetary transmission mechanism will be supported with additional macro-prudential measures.

Liquidity conditions will continue to be closely monitored, and sterilization tools will be effectively utilized.

EMPHASIS ON 5% TARGET

The Board will determine policy decisions to establish monetary and financial conditions that will reduce the main trend of inflation and reach the 5% inflation target in the medium term, taking into account the delayed effects of monetary tightening.

In this context, all monetary policy tools will be used with determination. The Board will make decisions in a predictable, data-focused, and transparent framework.