2025.12.1111:30:34UTC+00Turkey Cuts Rate by 150 bps to 38%

In December 2025, the Central Bank of Turkey lowered its policy rate from 39.5% to 38%, marking the fourth successive reduction. This change exceeded market expectations for a more conservative cut to 38.5%, prompted by unexpectedly low inflation figures for November. The decrease in food prices contributed to a second month of easing inflation trends. Concurrently, the bank reduced the overnight lending and borrowing rates to 41% and 36.5%, respectively. Although demand conditions have improved and price pressures have slightly eased, the Monetary Policy Committee cautioned that inflation expectations and pricing behavior still pose risks to the planned path for disinflation. The committee reiterated its commitment to tight monetary policy until price stability is achieved, ensuring that rate decisions remain data-driven and prudent. The bank continues to target a medium-term inflation rate of 5%, though the annual inflation figure of 31.1% in November significantly surpasses the year-end target of 24%.