The Central Bank of Turkey has lowered its key interest rate to 8.5 percent for the first time since December 2022, by 0.5 percentage points. This information was announced on the regulator’s website.
In October of the previous year, the key interest rate was reduced from 12 to 10.5 percent, and as of December 2022, it was at 9 percent.
The Central Bank stated that inflation in Turkey continues to remain high on an international scale, and its effects are being closely monitored. The regulator also mentioned that comprehensive policies have brought improvements to the level and trend of inflation, and that financial conditions have helped accelerate the growth of industrial production and increase employment.
In light of this, the Monetary Policy Committee decided to lower the rate by 50 basis points. It was also emphasized that the Turkish Central Bank will carefully monitor the economic consequences of the earthquakes that occurred in the country in February, and create conditions to minimize the effects of natural disasters.
The current president of the country, Recep Tayyip Erdogan, adheres to monetary policy, within which the Central Bank maintains a low key interest rate to support cheap lending and economic growth at the expense of price stability. Against this background, the Turkish lira has devalued by almost three times against the dollar since 2021.