Türkiye lowers interest rates for first time in 2 years

ISTANBUL

The Turkish Central Bank on Thursday lowered interest rates 250 basis points to 47.5%.

It was the first rate cut in around two years.

From May 2023 until this March, in a series of hikes, the bank raised the rate from 8.5% to 50%, and then at its last eight Monetary Policy Committee meetings had kept the rate constant.

Anadolu, surveying economists before Thursday’s meeting, had predicted that the bank would lower the rate 150 basis points.

Touting Türkiye’s progress in fighting inflation, Cevdet Yilmaz, the country’s vice president, said: "We continue to see the positive results of our economic program in various areas."

As a result of the significant gains Türkiye achieved in the disinflation process, the Central Bank cut the policy rate by 250 basis points to 47.5%, he wrote on X.

He added: "The positive results of our transparent and predictable policy steps, which ensure strong coordination between monetary and fiscal policies, were instrumental in the Central Bank's decision to cut the policy rate after a period of 22 months."

Thanks to the economic team’s rule-based, effective policies, the inflation rate has fallen by 28.4 percentage points in the last six months, he said.

In this period, the country's macroeconomic indicators were realized in line with the disinflationary process, he noted.

Yilmaz added: "Within the framework of our projection of balancing our growth composition, domestic demand has fallen to levels that support disinflation thanks to our mutually supportive monetary and fiscal policies.

"Our current account balance improved significantly, while our strengthening reserves reinforced confidence in the economy."

He also said the country's top priority is to bring inflation down to single-digit levels and stabilize it at these levels.