Turkey’s central bank lowered its main interest rate for the first time in almost two years, pointing to slower consumer demand and the currency’s strength for a larger-than-expected cut of 250 basis points.
Policymakers lowered the benchmark rate to 47.5 per cent from 50 per cent in the first reduction since February 2023, when President Recep Tayyip Erdoğan pushed for lower borrowing costs to spur economic growth during his re-election campaign. The cut was bigger than the median forecast of a reduction to 48.25 per cent, according to economists polled by Bloomberg.
Annual consumer price inflation dipped to 47 per cent in November, down from a peak of nearly 86 per cent in October 2022. The government’s decision earlier this week to raise the minimum wage by just 30 per cent next year might have also encouraged the central bank’s move to ease rates, analysts said.