The Central Bank of the Republic of Türkiye cut its policy rate from 37.00% to 36.00% on 22 October. Following the first rate cut in 6 meetings, the lira fell against the yen amid yen strength and hit a record low.
The central bank cut its policy rate from 37.00% to 36.00% on the 22nd. The cut, the first in 6 meetings since January, came after September CPI growth fell below 30% for the first time in 5 years. While pointing to downside risks to the inflation outlook, the bank’s statement indicated that decisions would be made cautiously at each meeting going forward. The market reaction was reportedly limited, and expectations have grown that rate cuts will proceed at a gradual pace through 2027.
Meanwhile, the lira fell against the yen. As yen buying intensified against the backdrop of a global stock-market decline and lower long-term interest rates, lira/yen fell to around ¥3.12–3.13 in the early hours of the 23rd, at one point hitting a new record low.
The policy rate is expected to continue declining at a pace of around 1.00% per meeting, with further declines from 2027 onward presented as the central forecast. Some observers also noted that the latest rate cut had little direct impact on the lira exchange rate.