PodcastTurkey’s central bank cuts interest rates to 42.5 pct
Turkey's Central Bank announced its second interest rate decision of the year, cutting the policy rate by 250 basis points to 42.5 percent.
Duvar English
Turkish Central Bank announced a 250-basis point cut in its policy rate, lowering it from 45% to 42.5% following its Monetary Policy Committee (MPC) meeting on March 6. The decision was widely anticipated by economists, aligning with market expectations.
The central bank cited a decline in the underlying trend of inflation in February after an increase in January. While inflation in core goods remained relatively low, services inflation slowed down following the idiosyncratic rise earlier in the year. The bank also noted that domestic demand, though higher than expected in the fourth quarter, remained at levels conducive to disinflation.
The central bank reaffirmed its commitment to a tight monetary stance, emphasizing its role in stabilizing inflation through factors such as a moderation in domestic demand, a real appreciation of the Turkish lira, and improving inflation expectations. "The tight monetary stance will be maintained until price stability is achieved via a sustained decline in inflation," the statement read.
The decision marks the second consecutive rate cut in 2025, following a similar 250-basis point reduction in January. Economists surveyed ahead of the announcement had unanimously predicted the latest cut, with a median year-end policy rate forecast of 30%.
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