Turkey Cuts Rate 300bps to 43% Amid Easing Inflation

Turkey's central bank cut its benchmark interest rate by 300 basis points to 43%, marking the first reduction since an emergency rate hike in April that followed political turmoil in March and the arrest of Istanbul's mayor. The cut, which exceeded most analysts' expectations, comes as annual inflation eased to 35.05% in June, down from a peak of 75% last year. The central bank also reduced overnight lending and borrowing rates, citing a strengthened disinflationary impact from moderating demand. The bank expressed caution regarding risks from inflation expectations, geopolitical developments, and global trade protectionism. Most economists anticipate further gradual rate cuts through 2025 as the bank seeks to balance price stability with economic growth. The Turkish lira remained stable in response to the decision.