Turkey's Central Bank once again cuts key rate

Turkey's Central Bank slashed its key rate by 150 basis points to 10.5%, highter than expected.

Anadolu Agency - Duvar English

Turkey's Central Bank on Oct. 20 lowered its policy interest rate by 150 basis points to 10.5%.

"Increase in inflation is driven by the lagged and indirect effects of rising energy costs resulting from geopolitical developments, effects of pricing formations that are not supported by economic fundamentals, strong negative supply shocks caused by the rise in global energy, food and agricultural commodity prices," the bank said in a press release.

The bank added that "The Committee expects disinflation process to start on the back of measures taken and decisively implemented for strengthening sustainable price and financial stability along with the resolution of the ongoing regional conflict."

The bank said it plans to end the cut cycle after another rate cut in the next meeting.

In the previous monetary policy meeting last month, the bank lowered the policy rate by 100 basis points to 12%.

Last month, President Recep Tayyip Erdoğan has deemed interest rate his “biggest enemy,” vowing to pressure the central bank to lower the key interest rate further.

The government-run Turkish Statistical Institute (TÜİK) has reported an annual inflation rate of 83.45 percent in September, the highest since 1998, whereas the independent inflation group ENAG put the figure at 186.27 percent. Polls show Turks believe inflation is far higher than official data.