Turkey lowers interest rates to 42.5% following dip in annual inflation
The decision to further cut interest rates follows a decline in the country's year-on-year inflation to below 40%.
ANKARA — The Central Bank of Turkey on Thursday lowered interest rates by 250 basis points, from 45% to 42.5%, after the country’s annual inflation dropped below 40% for the first time in two years.
The bank attributed its decision to a relative decline in inflation for goods and services, along with a slowdown in domestic demand.
“Following the increase in January, the underlying trend of inflation decreased in February. Over this period, core goods inflation remained relatively low, while services inflation slowed down,” the Monetary Policy Committee said in a statement after it had met.
The bank also signaled that it could resume monetary tightening if the inflation outlook deteriorates, adding, “Monetary policy tools will be used effectively in case a significant and persistent deterioration in inflation is foreseen.”
