Turkey’s central bank on Thursday lowered its key interest rate for a third consecutive time as inflation has fallen below 40 percent for the first time since mid-2023, Agence France-Presse reported.
The monetary policy committee “decided to reduce the policy rate from 45 percent” in January to 42.5 percent, the bank said in a statement.
This is the third time the central bank cut its rate since December as its efforts to tame inflation are paying off.
Consumer prices rose by 39.05 percent last month, down from 42.1 percent in January, according to the country’s statistics institute.
Turkey has experienced double-digit inflation since 2019, making life increasingly more expensive for millions of people.
“The tight monetary stance will be maintained until price stability is achieved via a sustained decline in inflation,” the central bank said.
It said the monetary committee would adjust the policy rate “prudently on a meeting-by-meeting basis with a focus on the inflation outlook.”
“Monetary policy tools will be used effectively in the event a significant and persistent deterioration in inflation is foreseen,” it said.
The central bank began to raise interest rates in 2023 after President Recep Tayyip Erdogan dropped his opposition to orthodox monetary policy.
Annual inflation soared to 75 percent in May last year but began to ease the following month.