Turkish Central Bank cuts discount rate for the first time in almost two years

The Turkish Central Bank has reduced the discount rate from 50 to 47.5%. This was reported on December 26 on the website of the regulator.

It is specified that the key rate went down for the first time in two years.

"The underlying inflation trend was virtually unchanged in November. <...> Indicators for the last quarter indicate that domestic demand, which is at the level of deinflation, continues to slow down," - stated in the publication.

In Turkey, the rate reached 300% during the 2000-2001 economic crisis and only dropped below 50% in 2003. Thus, since that year, the current increase has become a record.

On March 11, the Turkish lira updated the historical minimum to the dollar and exceeded the mark of 32 lira per $1. The next day, BitRiver financial analyst Vladislav Antonov called "Izvestia" the main reasons for the weakening of the Turkish currency. Among other things, the expert attributed them to high inflation in the country, which reached 67.07% in annualized terms in February 2024, as well as the depletion of foreign exchange reserves in the country.

On January 25, the Monetary Policy Committee of the Central Bank of Turkey raised the discount rate by 250 basis points to 45%. On March 21, the Central Bank of Turkey raised the discount rate to 50%.