Turkey's Central Bank Lowers Key Interest Rate for the First Time in Two Years

On December 26, the Central Bank of Turkey announced a reduction in its key interest rate by 250 basis points, lowering it to 47.5%. This is the first rate cut in two years, with the previous reduction occurring in February 2023.

In its statement, the Central Bank explained that the decision was influenced by "flat" inflation levels in November, which are expected to decline further in December.

The statement also underscored that "a tight monetary policy will remain in place until there is clear and sustained progress in reducing monthly inflation rates."

• "The Monetary Policy Committee will continue to adjust interest rates as necessary to achieve the medium-term inflation target of 5%," the Bank added.

The last rate adjustment was made in March when the Bank raised the rate by 500 basis points—from 45% to 50%.

Before this latest cut, the key interest rate had remained at 50% for several consecutive months, marking the highest level in two decades.