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Citing slowing inflation, the bank’s Monetary Policy Committee
said it was reducing its one-week repo rate to 47.5% from the
current 50%.
The committee said in a statement that the overall inflation
trend was “flat” in November and that indicators suggest it is
likely to decline in December. Demand within the country was
slowing, helping to reduce inflation, it said.
Inflation in Turkey surged in recent years due to declining
foreign reserves and President Recep Tayyip Erdoğan’s
unconventional economic policy of lowering rates as a way to
tame inflation — which he later abandoned.
Inflation stood at 47% in November, after having peaked at 85%
in late 2022, although independent economists say the real rate
is much higher than the official figures.
Most economists argue that higher interest rates help control
inflation, but the Turkish leader had fired central bank
governors for failing to fall in line with his previous
rate-cutting policies.
Following a return to more conventional policies under a new
economic team, the central bank raised interest rates from 8.5%
to 50% between May 2023 and March 2024. The bank had kept rates
steady at 50% until Thursday's rate cut.
The high inflation has left many households struggling to afford
basic goods, such as food and housing.
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