2025.03.0611:29:00UTC+00Turkey Central Bank Slashes Rate By 250 Bps

Turkey's central bank lowered its benchmark rate for the third straight time on Thursday as the underlying trend of inflation softened.

The Monetary Policy Committee, headed by Yasar Fatih Karahan, decided to reduce the policy rate to 42.5 percent from 45.0 percent, as widely expected.

The bank had reduced the rate by 250 basis points each in December and January.

"The Committee will adjust the policy rate prudently on a meeting-by-meeting basis with a focus on the inflation outlook," the bank said.

"Taking into account the lagged effects of monetary tightening, the Committee will make its policy decisions so as to create the monetary and financial conditions necessary to ensure a decline in the underlying trend of inflation and to reach the 5 percent inflation target in the medium term," the bank said.

Data released earlier this week showed that consumer price inflation slowed to 39.05 percent in February from 42.12 percent in January.

Nicholas Farr, an economist at Capital Economics said the headline inflation will continue to fall over the coming months reaching 26.0 percent by end-year.

The economist said the easing cycle is likely to be continued. The policy rate is expected to reach 32.00 percent at the end of 2025.