MPC: in a bit of a hurry

TURKEY - Report 24 Jul 2025 by Murat Ucer

The CBRT/MPC lowered the policy rate (one-week repo rate) by a more than expected 300 bps to 43% today, vs consensus and our expectation of 250 bps. The O/N lending and borrowing rates were also lowered by 300 bps (see chart), as the asymmetry of the O/N corridor was maintained, with the former now at 46%, down from 49%, and the latter at 41.5%, down from 44.5%.

The CBRT expects a “temporary” rise in July inflation “due to month-specific factors”, while it sees demand conditions as being more disinflationary now (“the disinflationary impact of demand conditions has strengthened”, vs “[d]ata for the second quarter point to a slowdown in domestic demand” in the previous statement).

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