Experts assessed the Turkish Central Bank's rate cut for the first time in almost two years

The Central Bank of Turkey 's (CBR) reduction of the discount rate to 47.5% is a trial balloon to address inflationary pressures and maintain economic growth, independent expert and economist Andrei Barkhota told Izvestia on December 26.

"Reducing the key rate by 2.5 percentage points from the 50% level is a 5% cut. Such a loosening of monetary policy should not cause inflation to accelerate, at the same time [it] may support inflationary demand to some extent," he said.

According to him, doubts about the effectiveness of inflation targeting have long been present in the minds of the leadership of the Republic of Turkey. The expert clarified that when asset rates in Turkish lira remained high for a long time, the consumer price index did not decline in the desired amplitude.

"This largely separates the financial system of Turkey from the countries of Southern Europe, which are members of the European Union. Nevertheless, Turkey currently has no other conventional levers to regulate the price overhang," he added.

In turn, Ilyas Zaripov, PhD in Economics, Associate Professor of the Department of Global Financial Markets and Fintech at Plekhanov Russian Economic University, speaking about the rate forecasts for next year, explained that everything will depend on the macroeconomic and political situation in Turkey, the level of economic activity, demand for Turkish goods, and political stability in the region.

"Most analysts are inclined to believe that the rate of the Central Bank of Turkey will range from 27 to 35% in 2025," he stressed.

Earlier in the day, it was reported that the Turkish Central Bank cut its discount rate from 50 to 47.5%. Its level fell for the first time in two years. The regulator noted that the indicators for the last quarter indicate that domestic demand, which is at the level of deinflation, continues to slow down.