Turkey Central Bank Slashes Rate For Second Straight Time

(RTTNews) - Turkey's central bank slashed its benchmark rate by 250 basis points for the second straight meeting on Thursday as inflation slowed more sharply towards the end of 2024.

The Monetary Policy Committee of the Central Bank of the Republic of Turkey, or CBRT, headed by Yasar Fatih Karahan decided to cut the policy rate to 45.0 percent from 47.5 percent.

The outcome of the meeting matched expectations. The bank had reduced the rate by 250 basis points in December 2024.

The CBRT had lowered interest rates last in February 2023 that was followed by a series of interest rate hikes.

The central bank affirmed that the tight monetary stance will be maintained until price stability is achieved via a sustained decline in inflation.

"Accordingly, the policy rate will be determined in a way to ensure the tightness required by the projected disinflation path taking into account realized and expected inflation, and the underlying trend," the bank added.

Policymakers said the decisions will be make on a meeting-by-meeting basis with a focus on the inflation outlook.

Consumer price inflation softened to 44.38 percent in December from 47.09 percent in November. This was the weakest inflation since June 2023.

Although underlying trend of inflation eased in December, it would rise in January on a rise in services cost, the bank cautioned.

Capital Economics' economist William Jackson said the central bank is most likely to opt for another 250 basis point reduction at the next meeting in March.

However, the easing cycle will probably slow later in the year, with the policy rate ending the year around 30 percent, the economist added.