Interest rates in Turkey are lowered to 47.5 percent.

Istanbul (AFP): In an effort to combat double-digit inflation, Turkey’s central bank reduced its main interest rate on Thursday for the first time in over two years.

Citing improvements in “inflation expectations and pricing behavior,” the bank’s monetary policy committee voted to lower the target rate from 50% to 47.5%.

February 2023 saw the most recent reduction.

After President Recep Tayyip Erdogan backed off from his hostility to conventional monetary policy last year, the central bank started raising interest rates to combat skyrocketing prices.

Since March, it has maintained the primary rate at 50%.

Following eight months of stable policy, Thursday’s decision marks the beginning of an easing cycle.

The bank said that its firm monetary policy “is strengthening the disinflation process and bringing down the underlying trend of monthly inflation.”

For the sixth consecutive month, Turkey’s annual inflation rate decreased to 47.1 percent in November.

From an earlier projection of 38 percent in August, the central bank now projects inflation to reach 44 percent by the end of 2024.

The bank stated that both realized and forecast inflation will be taken into consideration when determining the policy rate level in order to guarantee the tightness needed by the projected disinflation path.

The central bank said last week that it will have fewer policy sessions in the upcoming year.