Türkiye’s central bank cut its benchmark policy rate by 100 basis points to 36% on Thursday, in line with market expectations, following five consecutive meetings at which rates were left unchanged.

The Monetary Policy Committee, chaired by Governor Fatih Karahan, lowered the one-week repo auction rate from 37%, The Caspian Post reports, citing Anadolu Agency.

The bank also reduced its overnight lending rate from 40% to 39% and its overnight borrowing rate from 35.5% to 34.5%.

Despite monthly fluctuations, recent inflation data and leading indicators confirm a slowdown in the underlying inflation trend, the committee said in a statement.

Economic activity data and the limited pass-through of supply shocks to domestic prices indicate that domestic demand remains weak, it added.

However, elevated energy prices driven by ongoing geopolitical tensions continue to pose an upside risk to the inflation outlook.

The committee said it is closely monitoring the impact of geopolitical developments on inflation through costs, economic activity and expectations.

“The tight monetary policy stance, which will be maintained until price stability is achieved, will strengthen the disinflation process through demand, exchange rate, and expectation channels,” the committee said.

Future rate decisions will be based on actual and expected inflation, as well as its underlying trend, to maintain the degree of monetary tightness needed to support the projected disinflation path in line with interim targets.

The committee said the size and timing of policy steps would be determined prudently on a meeting-by-meeting basis, with a focus on the inflation outlook.

“In case of a significant and persistent deterioration in the inflation outlook, monetary policy stance will be tightened,” the committee said, reiterating its focus on upside risks to inflation.

Additional macroprudential measures will support monetary transmission if unexpected developments arise in credit and deposit markets, while liquidity management tools will continue to be used effectively.