Turkey’s Central Bank Cuts Rates for Fourth Consecutive Time

The Central Bank of Turkey lowered its benchmark interest rate for the fourth straight month on Thursday, easing policy further after November inflation data came in better than expected.

The Monetary Policy Committee, chaired by Governor Fatih Karahan, cut the one-week repo rate to 38%, down from 39.5%. The decision follows a series of reductions since autumn as policymakers signal cautious optimism over the inflation outlook.

In a statement accompanying the move, the committee said November’s consumer-price inflation surprised to the downside, largely due to a sudden decline in food prices. Despite the improvement, officials emphasized prudence, warning that inflation expectations and pricing behavior “continue to pose risks to the disinflation process.”

The Turkish lira showed little immediate reaction, trading at 42.61 per U.S. dollar at 2:05 p.m. in Istanbul.

Global banks were split ahead of the announcement, with forecasts divided between a 100- and 150-basis-point cut. Earlier this week, sources familiar with internal discussions told Bloomberg that Governor Karahan had signaled a bias toward prioritizing negative economic developments over isolated improvements in inflation data.

Turkey’s annual inflation slowed more sharply than anticipated in November, easing to 31.1%. Finance Minister Mehmet Şimşek has indicated the year is likely to close near this level. Still, inflation remains well above the central bank’s year-end target of 24%, driven in part by food-price spikes recorded earlier in the year.

In October, the bank cut the one-week repo rate by 100 basis points to 39.5%, maintaining at the time that monetary conditions remained restrictive despite the gradual shift toward easing.