The Central Bank of Turkey has once again reduced interest rates to 38%, as signs of improvement emerge with the decline in inflation.

Against the backdrop of inflation falling more than expected, the Turkish central bank announced on December 11th that it would once again cut interest rates, lowering the benchmark rate by 150 basis points to 38%, indicating that it will continue to advance its loose monetary policy after inflation pressure eases. In November, Turkish inflation rose by 31.07% year on year, the lowest level since the end of 2021. The central bank stated in its declaration that although inflation expectations and pricing behavior still pose risks, there has been some improvement, with weakening food prices being the main reason for the data falling below expectations that month. The central bank believes that the demand environment in the fourth quarter overall favors a decline in inflation.