Turkey Cuts Interest Rate to 38% as Inflation Eases | CBRT

Turkish Central Bank Cuts Policy Rate to 38%, Citing Improving Inflation Trend

The Central Bank of the Republic of Türkiye (CBRT) has lowered its key policy rate by 150 basis points to 38%, in line with market expectations. The decision follows better-than-expected November inflation data, largely due to falling food prices, and a modest decline in the underlying inflation trend.

At its latest Monetary Policy Committee meeting, the CBRT reduced the one-week repo rate from 39.5% to 38%, signaling a continuation of its cautious, data-driven approach to monetary easing that began in late 2024.

Inflation and Economic Outlook

Consumer inflation in November came in lower than projected, supported by domestic demand conditions. However, the central bank noted that inflation expectations and pricing behavior continue to pose risks, underlining the need for vigilance.

Commitment to Price Stability

Despite the rate cut, the CBRT reaffirmed its commitment to a restrictive monetary policy until price stability is achieved, aiming to reach a medium-term inflation target of 5%. Policy adjustments will continue to consider both realized and expected inflation to maintain the required monetary tightness.

Strategic Context

This easing step follows a period of aggressive tightening between May 2023 and March 2025, when rates were raised from 8.5% to a peak of 50% to curb soaring inflation. The latest cut comes as annual inflation fell to a four-year low of 31.07% in November, marking a carefully managed normalization process balancing economic growth and disinflation.