Big Rate Cut at the Central Bank of Turkey – Currency Thoughts

Big Rate Cut at the Central Bank of Turkey

July 24, 2025

Today’s three percentage point cut in the Central Bank of Turkey‘s interest rate to 43.0% exceeded analyst expectations somewhat and almost reversed the entire 350-basis point hike done in April. Turkish CPI inflation of 35% last month was at a 43-month low and eight percentage points below the new central bank rate level. Officials felt comfortable making such a large reduction because the real interest rate level remains quite positive, and “recent data indicate that the disinflationary impact of demand conditions has strengthened.” But the statement warns that July inflation might tick higher and assures that “potential effects of the geopolitical developments and the rising trade protectionism on the disinflation process are closely monitored.” Turkey’s erratic monetary policy in recent years is often cited by analysts worried about Trump’s relentless pot shots at Federal Reserve policy at what can happen when central bank independence gets compromised.

Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: Central Bank of Turkey

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on Thursday, July 24th, 2025 at 8:08 am and is filed under Central Bank Watch.
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