Turkey’s central bank lowered its key interest rate on Thursday for the first time since February 2023, cutting it by 2.5 percentage points to 47.5%. This move comes in response to a slowdown in inflation, which remains above 47% year-on-year.
The rate had been held steady at 50% since March as part of efforts to curb inflation. The central bank, while cautious, explained that recent indicators show domestic demand continues to slow, supporting the ongoing decline in inflation.
This rate cut follows Tuesday’s announcement of a wage increase for Turkey’s minimum wage, set for January 1st. While unions had demanded a 70% increase, the government agreed to a 30% raise, bringing the minimum wage to 22,100 Turkish lira (roughly 600 euros).
“The restrictive stance of monetary policy will be maintained until a significant and sustained decline in underlying inflation is achieved, and inflation expectations converge toward the targeted range,” the central bank said in a statement.
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