MNI CBRT WATCH: Turkey CenBank Cuts 100Bp As Pressures Build

The Central Bank of the Republic of Turkey slowed the pace of monetary easing from 250 basis points to 100 basis points on Thursday, with the latest cut leaving the policy rate at 39.5%, following an increase in the underlying trend of inflation in September. (See MNI EM CBRT WATCH: Turkey Central Bank To Deliver 100-150Bps Cut)

Recent data suggest that demand conditions remain at disinflationary levels, the CBRT said in a statement which also pointed to a slowdown in the disinflation process ahead of next month's Inflation Report. (See MNI EM INTERVIEW: CBRT To Cut 100Bps With Credibility In Focus)

“The risks posed by recent price developments, particularly in food, to the disinflation process through inflation expectations and pricing behaviour have become more pronounced,” the statement said.

The Monetary Policy Committee removed September's references to higher-than-expected Q2 GDP growth and weak final domestic demand, but retained an affirmation of the CBRT’s commitment to determining the correct policy rate in line with interim targets.

Otherwise the statement was largely unchanged from the previous month, with the step size of future moves to be reviewed “prudently on a meeting-by-meeting basis with a focus on the inflation outlook,” and the monetary policy stance to be tightened “in case of a significant deviation in inflation outlook from the interim targets.” (See MNI INTERVIEW: Flat CPI Puts CBRT Nearer Hike Trigger Point)