The Central Bank of Turkey lowered its key interest rate from 45% to 42.5% on Thursday, citing a decline in inflation across the country. This marks the third consecutive rate cut in three months.
Turkey’s Central Bank balances inflation control and economic growth © Mena Today
The Central Bank of Turkey lowered its key interest rate from 45% to 42.5% on Thursday, citing a decline in inflation across the country. This marks the third consecutive rate cut in three months.
Turkey’s annual inflation rate dropped to 39.05% in February, falling below the 40% threshold for the first time since June 2023. The Central Bank reaffirmed its commitment to a tight monetary policy, stating that it will be maintained “until a permanent decline in inflation and price stability is achieved.”
To combat soaring prices fueled by the weakness of the Turkish lira, the Central Bank had raised its benchmark interest rate from 8.5% to 50% between June 2023 and March 2024.
From Record-High Inflation to Easing Pressures
Turkey experienced an inflation peak of over 75% in May 2024 on a year-over-year basis. The latest policy adjustments indicate that authorities are seeking a balance between controlling inflation and fostering economic stability.
What’s Next? The coming months will reveal whether this monetary policy shift succeeds in ensuring long-term price stability while sustaining economic growth.
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