The Central Bank of Turkey has cut its key interest rate to 39.5%.

On October 23, 2025, the Central Bank of Turkey (CBRT) at the Monetary Policy Committee meeting decided to reduce the key interest rate — the weekly repo rate — from 40.5% to 39.5%, a 100-basis-point cut.

At the same time, other monetary policy parameters were adjusted: the overnight lending rate was lowered from 43.5% to 42.5%, and the overnight deposit rate from 39% to 38%.

In its official statement, the CBRT noted that inflationary pressure in the economy remains, but the rate cut is aimed at supporting economic activity and adapting monetary policy to current conditions. The document emphasizes that the regulator “remains committed to disinflation targets” and will act based on incoming data.

The decision stated that “the underlying inflation trend remains high, but signs of slowing domestic demand provide grounds for cautious easing.” The central bank expects annual inflation to continue declining in the medium term, although short-term risks persist — especially due to rising food and energy prices.

Markets reacted calmly, as most analysts expected a rate cut to 39–39.5%. Experts note that this move signals a shift toward a more flexible policy after a long period of tight measures to combat inflation.

Economists warn that premature easing could increase pressure on the Turkish lira and trigger another round of price increases. They believe that the rate cut can stimulate lending and consumer demand but carries the risk of accelerating inflation, which remains significantly above CBRT’s 5% target.

The regulator stressed that it is prepared to tighten monetary measures again if price stability comes under threat.