UPDATES WITH MORE COMMENTS FROM CENTRAL BANK; ADDS DETAILS
By Muhammed Ali Gurtas
ANKARA (AA) - The Turkish Central Bank on Thursday lowered its one-week repo rate 325 basis points.
The bank's policy rate -- also known as the one-week repo rate -- fell from 19.75% to 16.50%.
The decision came in a statement from the bank's Monetary Policy Committee (MPC) meeting -- the sixth of eight meetings scheduled for 2019.
On Tuesday, a group of 18 economists surveyed by Anadolu Agency forecast an average drop of 250 basis points in the one-week repo rate, with the lowest estimate at 175 basis points, and the highest at 375.
In 2018, the bank held nine MPC meetings, as interest rates climbed from 8% to 24% over the course of the year.
"Recently, advanced economy central banks have started to adopt more expansionary policies as global economic activity weakened and downside risks to inflation heightened," said the bank in a statement.
"While these developments support the demand for emerging market assets and the risk appetite, rising protectionism and uncertainty regarding global economic policies are closely monitored in terms of their impact on both capital flows and international trade."
The inflation outlook in Turkey continues to improve, it added.
"In addition to the stable course of the Turkish lira, improvement in inflation expectations and mild domestic demand conditions supported the disinflation in core indicators.
"In August, consumer inflation displayed a significant fall with the contribution of core goods, energy and food groups," the bank said.
In August, consumer prices in Turkey rose 15.01% on a yearly basis, versus annual inflation of 16.65% the previous month.
Over the past decade, annual inflation saw its lowest level at 3.99% in March 2011, and it peaked at 25.24% last October.
The bank stated that domestic demand conditions and the level of monetary tightness continue to support disinflation.
"Underlying trend indicators, supply side factors, and import prices lead to an improvement in the inflation outlook.
"Accordingly, considering all the factors affecting inflation outlook, the Committee decided to reduce the policy rate by 325 basis points," it said.
Under the new economic program announced last September, Turkey’s inflation rate target is 15.9% this year, 9.8% next year, and 6.0% in 2021.
"At this point, the current monetary policy stance, to a large part, is considered to be consistent with the projected disinflation path," the bank added.