Could this rate cut signal the beginning of a new economic strategy for Turkey, or will it further complicate the fight against inflation?

• Interest Rate Cut Announced: Turkey’s central bank lowered its one-week repo rate by 2.5 percentage points to 47.5%, marking its first rate cut in nearly two years.
• Inflation Trends Improve: The Monetary Policy Committee cited a “flat” inflation trend in November, with indications of a potential decline in December.
• Economic Context: Inflation peaked at 85% in late 2022 and has since moderated to 47% in November, though independent economists suggest the real rate may be higher.
• Policy Reversal: The decision follows a dramatic shift from President Erdoğan’s previous policy of rate cuts to more conventional monetary approaches under a new economic team.
• Historical Rate Hikes: Between May 2023 and March 2024, interest rates surged from 8.5% to 50% as part of efforts to stabilize Turkey’s economy.
• Household Struggles: Despite improvements, high inflation continues to strain households, with many facing challenges affording essentials like food and housing.
• Economic Outlook: The rate cut reflects the central bank’s efforts to balance growth and inflation control amid domestic and global challenges.