Turkey’s central bank lowered its key interest rate by 2.5 percentage points to 45% on Thursday, in its second rate cut in as many months as official figures showed inflation was easing.
Despite the significant rate cut, the central bank reaffirmed its commitment to controlling soaring inflation which has left many households in Turkey struggling to afford basic needs.
Inflation surged in recent years, due to a depreciation of the Turkish lira and President Recep Tayyip Erdogan’s unconventional economic policies of lowering interest rates despite high inflation.
Before the rate cut in December, the central bank had maintained the interest rate at 50% for several months.
Annual inflation in Turkey slowed to 44.38% in December 2024 from 47.09% in the previous month, although independent economists say the real rate is much higher.
