Turkey's Central Bank Cuts Policy Rate by 250 Basis Points to 47.5%, Starting Easing Cycle

The Central Bank of the Republic of Turkey reduced its one-week repo rate by 250 basis points to 47.5% on 26 December 2024, beginning an easing cycle.

The cut marks the opening move after a tightening campaign in which the CBRT raised rates from 8.5%, starting in June 2023, all the way to 50% in March 2024, before holding them there for nine months.

FROM TIGHTENING PEAK TO FIRST CUT

The CBRT's prior tightening campaign amounted to a cumulative increase of 4,150 basis points from June 2023 to March 2024. Annual inflation had peaked above 80% in 2022.

By late December 2024, annual inflation was approximately 47%. The CBRT said it would set the policy rate to ensure the tightness required by the projected disinflation path, taking into account both realised and expected inflation.

POLICY GUIDANCE

The CBRT's statement said the tight monetary stance would be maintained until a significant and sustained decline in the underlying trend of monthly inflation was observed, and that decisions would be taken prudently on a meeting-by-meeting basis.