Turkey Interest Rate

The Central Bank of Turkey cut its benchmark interest rate by 300 basis points to 43% in its July 2025 meeting, more than median market expectations of a softer cut to 43.5%. The move erased most of the 350bps hike in the benchmark rate in April, when geopolitical tension triggered a plunge in the lira and threatened the monetary authority's tools that control the depreciation of the currency. The central bank noted that the underlying trend of inflation was unchanged according to the latest data, although higher borrowing costs drove disinflationary effects of demand conditions to increase. The TCMB also noted that increased economic uncertainty and the rise of protectionism in global trade also placed downside risks to growth, also warranting a reduction in borrowing costs. In the meantime, the overnight borrowing rate and the overnight cutting rate were also reduced by 300bps to 46% and 41.5%, respectively.