The Central Bank of Turkey has cut its key interest rate by 250 basis points - from 45% to 42.5%, the regulator said in a report after the Monetary Policy Committee meeting.
“The Committee decided to reduce the key interest rate from 45% to 42.5%. The underlying inflation trend calmed down in February after rising in January. During this period, core goods price inflation remained relatively low, while service price inflation slowed down after the increase typical of January“, the Central Bank said in a press release.
The Committee concluded that there is a “favorable outlook“ for a decrease in inflation in the first quarter of this year. “Although inflation expectations and price dynamics show an improving trend, they still remain a risk factor in terms of the disinflation process“, the bank said, noting that the regulator will continue to pursue a tight monetary policy.
In June 2023, the Central Bank of Turkey raised the base rate from 8.5% to 15% for the first time in more than two years, after which it regularly revised it upwards until March last year. After that, the regulator left the rate unchanged at 50% for eight consecutive months as part of the government's tight financial policy. In December 2024, the Central Bank of Turkey lowered the base rate to 47.5% and continues to reduce it.