The Central Bank of Turkey reduced its benchmark interest rate to 38%, marking the fourth consecutive policy cut and surprising markets that anticipated a move to 38.5%. The decision follows a series of aggressive easing steps aimed at supporting economic activity, even as inflation remains elevated and external pressures persist.
Officials signaled continued confidence in Turkey’s disinflation path, arguing that lower borrowing costs are necessary to support credit conditions and stabilize domestic demand. However, the rapid pace of rate cuts continues to raise concerns among analysts, who warn that premature easing could reignite inflationary pressures or destabilize the currency.
The latest move underscores Turkey’s determination to pursue growth-oriented monetary policy despite market skepticism. Investors will closely watch upcoming inflation data and currency dynamics for clues on whether the easing cycle will continue into early 2026.