The Turkish central bank has cut its interest rates for the second time in a row. The key interest rate will be reduced by 2.5 percentage points to 45.0 percent, as the central bank announced on Thursday after its council meeting in Ankara.
Economists had expected this decision. It had already reduced interest rates by 2.5 percentage points in December.
In December, the annual inflation rate fell to 44.4 percent. The central bank wants to reduce the rate to 21 percent by the end of the year. In 2022, inflation had risen to 85 percent. A series of interest rate increases subsequently contributed to a decline in inflation. The last one Interest rate increase took place in March 2024 to 50.0 percent.
The central bank wants to support economic growth with interest rate cuts. However, the aim is also to prevent companies’ and households’ inflation expectations from rising further. These are higher than the central bank forecasts. The central bank has already described the expectations as a risk to the disinflation process.
President Recep Tayyip Erdogan has not recently criticized the central bank’s monetary policy course, although he had previously always spoken out against high interest rates. However, some experts fear that Erdogan could return to his previous policies.
ANKARA (dpa-AFX)
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