Turkey central bank slows easing with 100-point cut to 39.5%

Turkey's central bank cut its policy interest rate by 100 basis points to 39.5% on Thursday, slowing its easing cycle as expected as growing inflation risks cloud the economic outlook.

At its previous meeting in September, the bank had already slowed its easing cycle with a 250 basis point cut in the face of higher-than-expected inflation and heightened political risk. A 300-point cut was made in the meeting before that.

In a Reuters poll, the majority of 17 economists forecast a cut in the one-week repo rate, with the median forecast being a 100 basis-point cut. Four economists expected rates to be unchanged.

Turkey's annual inflation jumped to 33.29% in September, well above expectations, triggering predictions of a slowdown in the monetary easing cycle. In August, the central bank set an end-year inflation forecast of 24%.

In April, the bank hiked the policy rate to 46%, reversing an easing cycle that had begun in December, following market volatility over the March arrest of Istanbul Mayor Ekrem Imamoglu, who is President Tayyip Erdogan's main rival.

Imamoglu is from the main opposition Republican People's Party (CHP), which has been the target of a year-long legal crackdown and is facing a potential court ruling on Friday that could result in the ouster of the party's leader.