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Investing.com - The Central Bank of the Republic of Türkiye (CBRT) cut its policy rate by 100 basis points to 37% on Thursday, a smaller reduction than the widely anticipated 150 basis point cut.
The central bank maintained its forward guidance, indicating it would continue reviewing the step size of rate adjustments on a meeting-by-meeting basis with a focus on inflation outlook. In its statement, the CBRT noted that leading indicators point to firmer consumer inflation in January, primarily driven by food prices.
The Monetary Policy Committee (MPC) acknowledged that while demand conditions continue to support the disinflation process, their contribution is moderating. The statement also highlighted ongoing risks to disinflation related to inflation expectations and pricing behavior, signaling a cautious approach to monetary policy.
The smaller-than-expected rate reduction reflects the central bank’s hawkish stance in response to anticipated higher January inflation figures. This proactive approach could help contain potential deterioration in inflation expectations following the release of January inflation data.
The CBRT is scheduled to hold its next monetary policy meeting on March 12, where further adjustments will depend on inflation data. The pace of future rate cuts remains flexible and could increase again if the decline in the underlying inflation trend resumes.
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