Turkey plans ‘landmark’ rate cuts in 2025 says Erdoğan

Reuters/Pilar Olivares

• Lowering inflation a priority
• Inflation at 47% from 75%
• 2024 economic goals achieved

Turkey is planning additional interest rate cuts in 2025 after the central bank cut its key rate to 47.5 percent to tame inflation, president Tayyip Erdoğan has said.

“The priority in our economy programme is to lower inflation,” Daily Sabah newspaper reported, quoting the president, who termed 2025 a “landmark year for rate cuts”.

He said the government aims to reach the desired inflation levels by leveraging other tools in addition to the monetary policy, describing the move as “indispensable”.

Mustafa Sönmez, an economist, told AGBI that the decision to cut rates was no surprise, as there had been pressure from the business community to ease borrowing costs. However, he did not believe commercial banks would move quickly to reduce their own rates on loans.

Annual inflation dropped to 47.1 percent in November from 75 percent in May, marking its lowest level since mid-2023.

• Turkey minimum wage hike sparks inflation and strike threats
• Turkish builders sense opportunity in Syria
• The pros and cons for Turkey of a Syrian exodus

Erdoğan said that the government had achieved its economic programme goals for 2024 to a large extent despite the regional crises and domestic elections.

“International capital inflow to our country has accelerated, our reserves have strengthened and foreign exchange volatility has decreased,” he said.

The president said construction activities in the earthquake zone will be mostly completed, with plans to launch a social housing programme.