ISTANBUL: Turkiye’s central bank lowered its key interest rate on Thu­r­sday, the first cut in nearly two years as it battles with double-digit inflation.

The bank’s monetary policy committee decided to reduce the policy rate from 50 per cent to 47.5pc, with a statement citing improvement in “inflation expectations and pricing behaviour”.

The last cut was in February 2023.

Thursday’s decision signals the start of an easing cycle after eight months of steady policy.

The bank said the decisiveness over its tight monetary stance “is bringing down the underlying trend of monthly inflation and strengthening the disinflation process”.

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In November, Turkiye’s annual inflation rate slowed for the sixth month in a row, at 47.1pc.

The central bank now expects inflation to reach 44pc at the end of 2024, up from a previous estimate in August of 38 pc.

The bank said the level of the policy rate would be determined in a way to ensure the tightness req­uired by the projected disinflation path, taking into account both realised and expected inflation.

Published in Dawn, December 27th, 2024