Turkey's Central Bank Cuts Key Rate by 250 Basis Points to 47.5% Amid Easing Inflation

Dec 26, 2024, 11:17 AM

Turkey's central bank has cut its key interest rate by 250 basis points to 47.5%, marking the first reduction in nearly two years. The decision comes as inflation in the country shows signs of easing, with the annual consumer price index dropping to 47.09% in November. The central bank's Monetary Policy Committee cited a 'flat' underlying trend of inflation in November and a decline in the underlying trend expected for December as reasons for the rate cut. This move follows an 18-month period of monetary tightening aimed at controlling soaring inflation, which had reached as high as 85% in 2022. The central bank's action is seen as a shift in monetary policy, with the rate cut exceeding economists' expectations of a 150-basis-point reduction. The decision is part of a broader strategy to manage economic growth and inflation, with the central bank maintaining a medium-term inflation target of 5% and projecting inflation to decline to 21% by the end of 2025.