Turkish Central Bank's Bold Interest Rate Move Amid Easing Inflation

Turkiye's central bank reduced its key interest rate to 45%, marking the second consecutive monthly cut amid easing inflation. The Monetary Policy Committee remains committed to inflation control, while critics argue actual inflation rates exceed official figures. President Erdogan's recent policy reversals reflect ongoing economic challenges.

Turkiye's central bank has taken a bold step by lowering its key interest rate by 2.5 percentage points to 45% as signs of easing inflation emerge. This marks the second rate cut in as many months, following a similar reduction last December.

The Monetary Policy Committee, responsible for the nation's monetary strategy, has adjusted the one-week repo rate, although inflation remains a pressing concern. With the headline rate slowing to 44.38% in December, the bank remains vigilant, acknowledging persistent risks to its disinflation goals.

Turkiye's economy has faced major challenges, exacerbated by a depreciating currency and President Erdogan's unorthodox economic policies. His recent shift towards conventional approaches, including appointed economic advisors and rate hikes, indicates a strategic recalibration amid macroeconomic pressures.

(With inputs from agencies.)