Turkey's central bank cut its key interest rate by 250 basis points to 47.5% on Thursday, a bit more than expected, launching an easing cycle meant to leave behind protracted economic turmoil and a cost-of-living crisis.

The Central Bank of the Republic of Turkey (CBRT) has cut its benchmark one-week repo rate by 250 basis points, bringing it down to 47.5%. The move exceeded economists' forecasts of a 150-basis-point reduction and marked a shift in monetary policy after eight consecutive meetings.

Turkey’s central bank lowered its main interest rate for the first time in almost two years, pointing to slower consumer demand and the currency’s strength for a larger-than-expected cut of 250 basis points.

Turkey's President Tayyip Erdogan said on Saturday that there would be more interest rate cuts in 2025 after the central bank cut its key rate by 250 basis points to 47.5% this week.

The decision to cut interest rates follows 18 months of monetary tightening and comes amid ongoing efforts to stabilize the country’s runaway inflation.

Analysts are now expecting the Turkish central bank to deliver sizable interest-rate cuts at every policy meeting in 2025 following Thursday’s bigger-than-expected reduction, despite officials cautioning against an uninterrupted easing cycle.

By Akin Nazli in Belgrade The monetary policy committee (MPC) of Turkey’s central bank on December 26 cut its policy rate by 250bp to 47.5% (chart). The market was aware that a rate cut was on the cards.