Turkey’s central bank lowered its key interest rate by 2.5 percentage points to 47.5%, making it the first rate cut in nearly two years. The move aims to control inflation, which has surged in recent years due to declining foreign reserves and President Recep Tayyip Erdoğan’s economic policies.
The Monetary Policy Committee cited slowing demand within the country as a reason for the rate reduction, indicating that inflation is likely to decline in December. However, independent economists say the real rate of inflation is much higher than official figures, which stood at 47% in November.
Most economists believe that higher interest rates help control inflation, but Erdoğan’s previous policies sparked controversy among central bank governors who were fired for not aligning with his rate-cutting plans. Under a new economic team, the central bank has returned to more conventional policies, leading to a rate hike from 8.5% to 50%. The high inflation rate has left many households struggling to afford basic necessities like food and housing.
Source: https://apnews.com/article/turkey-central-bank-interest-rate-cut-ca1b3732bd09724cc50ae688711f24a3