Ankara: The Turkish Central Bank on Thursday lowered its policy rate by 150 basis points, matching the market forecasts.

According to Anadolu Agency, the benchmark one-week repo rate was lowered from 39.5% to 38%, aligning with the results of an Anadolu survey. The bank stated that consumer inflation in November was lower than expected due to a downward surprise in food prices. After an increase in September, the underlying trend of inflation slightly declined in October and November.

The Central Bank announced that the quarterly GDP growth in the third quarter exceeded projections, and leading indicators for the last quarter suggest that demand conditions continue to support the disinflation process. However, it noted that while showing signs of improvement, inflation expectations and pricing behavior still pose risks to the disinflation process.

The bank emphasized that maintaining a tight monetary policy stance until price stability is achieved will strengthen the disinflation process through demand, exchange rate, and expectation channels. It will ensure the necessary tightness by determining the policy rate based on realized and expected inflation, as well as its underlying trend.

The Monetary Policy Committee aims to create monetary and financial conditions necessary to reach a 5% inflation target in the medium term.

In November, Turkey's annual inflation rate eased to a four-year low of 31.07% from 32.87% in October, which was below market expectations. From May 2023 until March 2025, the bank raised the rate from 8.5% to 50%, maintaining it until the December 2024 meeting, when it lowered the rate by 250 basis points to 47.5%.

The bank subsequently cut the benchmark rate at its December, January, and March meetings from 50% to 42.5%. In April, the bank unexpectedly raised the rate by 350 basis points to 46%, leaving it unchanged at the June meeting, before reducing it by 300 basis points to 43% at the July meeting.

In August, the bank lowered the rate by 250 basis points to 40.5%, surpassing estimates, and further cut it by 100 basis points to 39.5% in its previous meeting.