By Don Nico Forbes
Turkey's central bank cut interest rates again at its latest meeting, but cited persistent risks to inflation despite November's quicker-than-expected slowdown in prices.
The Central Bank of Turkey cut its benchmark rate to 38.0% from 39.5% on Thursday.
The 1.5 percentage-point cut was larger than most analysts expected, according to Nicholas Farr at Capital Economics.
"The recent softer than expected Consumer Price Index data--headline inflation fell to 31.1% in November--seemed to be a key factor behind the decision," he said.
The decline in November was driven largely by a downward surprise in food prices. This followed several stubbornly high readings starting with an unexpected pickup in inflation in September.
Despite the cut, Turkey's central bank on Thursday noted lingering risks for consumer prices.
"While showing signs of improvement, inflation expectations and pricing behavior continue to pose risks to the disinflation process," it said.
The bank cut rates by 1 percentage point at its last meeting in October, a slowdown after two cuts of 2.5 and 3 percentage points in September and July, respectively.
The bank reiterated that a "tight monetary policy stance" would be maintained until price stability is achieved.
In November, it raised its inflation projection for the end of 2025 to be between 31% and 33%, from 25% to 29% previously, primarily driven by food prices. The bank still sees inflation between 13% and 19% by the end of 2026.
"We think that the disinflation path will be bumpy," Farr said. Capital Economics expects headline inflation to land around 22% by the end of next year.
Inflation has been falling steadily since May last year, after the central bank reversed its loose monetary-policy stance which had led to sharp price increases.
Write to Don Nico Forbes at don.forbes@wsj.com
(END) Dow Jones Newswires
12-11-25 0735ET
