Ankara – Business News Report|| The Central Bank of Turkey has officially reduced its primary interest rate by one hundred basis points to thirty-six percent. This decision marks the first reduction since September, signaling a shift in monetary policy after maintaining stability for several months. The Monetary Policy Committee made this choice during its meeting on Thursday, aligning with previous market expectations and economic forecasts.
Adjustments Across Lending Rates
In addition to the main repo rate, the bank lowered the overnight lending rate for Turkish lira from forty percent to thirty-nine percent. Furthermore, the borrowing rate for overnight loans was decreased from thirty-five point five percent to thirty-four point five percent. These adjustments aim to balance liquidity needs while addressing persistent inflationary pressures within the domestic economy.
Inflation Data and Policy Rationale
The central bank cited data from September indicating limited impact of supply shocks on local prices alongside weak domestic demand. Annual consumer price inflation dropped to twenty-nine point seven three percent, the lowest level in nearly five years. However, risks from geopolitical tensions affecting energy prices remain present, requiring continued vigilance from policymakers regarding future inflation trajectories.
Investment Fund Scandal Investigations
Concurrently, Turkish security forces arrested eighty-eight individuals connected to an investment fund manipulation scandal. Authorities have detained four hundred and four people since investigations began in September, targeting illegal profits and capital market interference. Over two hundred thousand investors were reportedly affected by these fraudulent activities involving over twenty billion dollars in assets.
Government Response and Market Stability
President Recep Tayyip Erdogan emphasized that all those involved will face accountability under government oversight. He criticized opposition parties for exploiting the crisis to damage public confidence. Meanwhile, the central bank increased repurchase financing and raised bank borrowing limits tenfold to support liquidity. Governor Fatih Karahan stated that current data does not suggest systemic risks extending beyond the fund sector.
Future Monetary Outlook
Economists predict the central bank may continue easing policies at its December meeting. The committee remains committed to transparent, data-driven decisions to ensure long-term price stability. All monetary tools will be used decisively if inflation expectations collapse unexpectedly. This strategic approach aims to restore investor trust while managing complex economic challenges effectively throughout the remainder of the year.
This story was produced in the newsroom from the disclosed sources named above.
