ISTANBUL, July 25 (Reuters) - Turkey’s central bank said on Thursday that maintaining a cautious monetary stance is required to support disinflation as it cut its key interest rate by a more-than-expected 425 basis points to 19.75%, its first policy change since last year’s currency crisis tipped the economy into recession.
“Keeping the disinflation process in track with the targeted path requires the continuation of a cautious monetary stance,” the central bank said in its first action under Murat Uysal, a former deputy. He was named governor less than three weeks ago, after Turkish President Tayyip Erdogan abruptly sacked his predecessor, Murat Cetinkaya.
“In this respect, the extent of the monetary tightness will be determined by considering the indicators of the underlying inflation trend to ensure the continuation of the disinflation process.”
The bank lowered its benchmark one-week repo rate from 24%, where it had remained since September, when a collapse in the Turkish lira pushed inflation to a 15-year high above 25%, prompting aggressive rate hikes. (Reporting by Ali Kucukgocmen Editing by Dominic Evans)