The overnight lending rate, which is the rate at which banks borrow from the Central Bank overnight, went from 8.50 percent to 8.25 percent.
However, Turkey’s overnight borrowing rate, under which banks lend or deposit money to the Central Bank, remained unchanged at 7.25 percent.
The one-week repo rate, known as policy rate, was also kept at 7.5 percent, the bank said.
In late liquidity window interest rates -- between 4 p.m. (1300 GMT) and 5 p.m. (1400 GMT) -- the borrowing rate has been kept at zero percent and the lending rate has been reduced from 10 percent to 9.75percent.
The bank said in a statement that recent data and indicators regarding the third quarter show a deceleration in Turkey’s economic activity and that current financial conditions are tight.
"While developments in tourism revenues will have a negative impact in the short run, the lagged effects of the developments in the terms of trade and the moderate course of consumer loans will continue to contribute to the improvement in the current account balance," the statement said.
"The slowdown in aggregate demand contributes to the gradual fall in core inflation. With the help from falling food prices, headline inflation is expected to display a decline in the short term," it added.
The recent tax adjustment in fuel prices and other cost factors limit the improvement in inflation and necessitate the maintenance of a cautious monetary policy stance, the bank said.
In light of these assessments, and considering its contribution to the effectiveness of monetary policy, the bank decided to take measured and cautious steps towards simplification.
The bank added its future monetary policy decisions would depend on the inflation outlook.
"Taking into account inflation expectations, pricing behavior and the course of other factors affecting inflation, the cautious monetary policy stance will be maintained," it said.
All but one of the 15 economists who attended the Anadolu Agency Finance Poll expected the upper band rate to be lowered to 8.25 from 8.50, while one economist expects a cut by 50 base points.
No change was expected in other short-term rates, according to the poll results announced Tuesday.