Turkey’s Central Bank Cuts Interest Rates by 250 Basis Points in January 2025
This move was part of the continuation of an easing policy that began in December 2024, aimed at supporting disinflation and stimulating economic growth.
Reasons for the Rate Cut
The decision to cut interest rates followed a recent decline in annual inflation. The central bank stated that, despite a temporary rise in January inflation—primarily due to increased service costs—the overall trend remained downward. Additionally, domestic demand was at a level that helped ease inflationary pressures.
Market Reaction and Forecasts
The rate cut aligned with market expectations. In a Reuters poll, all 13 participating analysts had predicted the rate would drop to 45%. Average forecasts suggest that the interest rate could fall to as low as 30% by the end of the year.
Future Policies
The CBRT announced that it would maintain its tight monetary policy until price stability is achieved and inflation declines sustainably. However, if disinflation continues, further rate cuts are expected in the coming months.
This decision by Turkey’s central bank reflects an effort to balance inflation control and economic growth support under the country’s current economic conditions.
