Move comes as a surprise, as many expected an average drop of 100 basis points in one-week repo rate, according to Anadolu Agency poll.

A logo of Turkey's Central Bank is pictured at the entrance of the bank's headquarters in Ankara, Turkey April 19, 2015.
A logo of Turkey's Central Bank is pictured at the entrance of the bank's headquarters in Ankara, Turkey April 19, 2015. (Reuters)

The Central Bank of Turkey on Thursday cut its one-week repo rate by 250 basis points.

The bank's policy rate, also known as one-week repo auction rate, became 14 percent, down from 16.5 percent.

The decision was above market expectations.

A group of economists polled by Anadolu Agency on Monday expected an average drop of 100 basis points in one-week repo rate.

The bank said the improvement in inflation expectations and mild domestic demand conditions supported the disinflation in core indicators. 

Inflation drops to single digit

Turkey's annual inflation rate dropped to single digits for the first time since July 2017, standing at 9.26 percent in September, according to Turkish Statistical Institute.  

Domestic demand conditions and the level of monetary tightness continue to support disinflation, the bank said. 

It stated that inflation is likely to materialise, notably below the projections in its latest inflation report by the end of this year.

Cautious monetary stance

The bank forecast the year-end annual inflation to reach 13.9 percent in the third inflation report of 2019, revealed on July 31. 

" ... the current monetary policy stance, to a large part, is considered to be consistent with the projected disinflation path," the bank said. 

It added that a cautious monetary stance should be continued to keep the disinflation process in track with the targeted path. 

Source: AA