Turkiye's Radical Rate Shift Amid Inflation Battle

Turkiye's central bank cut its interest rate by 2.5 points to 47.5% in a bid to address soaring inflation. This marks the first reduction in two years, influenced by a slowing inflation rate and domestic demand. Inflation peaked at 85% in late 2022 amidst unconventional economic policies.

In a decisive move to combat surging inflation, Turkiye's central bank slashed its key interest rate by 2.5 percentage points, bringing it down to 47.5%. This adjustment is the first of its kind in nearly two years, reflecting efforts to stabilize the economy amidst soaring inflation rates.

The Monetary Policy Committee cited a deceleration in inflation and reduced domestic demand as key factors in their decision to lower the one-week repo rate from 50% to 47.5%. Indicators suggest a potential decline in inflation rates by December, offering a glimmer of hope for stability.

Turkish inflation has been a critical issue, exacerbated by previous unconventional economic policies. The high inflation rate has strained households, making basic goods increasingly unaffordable. The bank's shift back to conventional economic practices under new leadership aims to recalibrate the financial landscape.

(With inputs from agencies.)