Turkey's central bank cut its key interest rate by 250 basis points to 47.5% on Thursday, a bit more than expected, launching an easing cycle meant to leave behind protracted economic turmoil and a cost-of-living crisis.

Turkey’s central bank lowered its main interest rate for the first time in almost two years, pointing to slower consumer demand and the currency’s strength for a larger-than-expected cut of 250 basis points.

Analysts are now expecting the Turkish central bank to deliver sizable interest-rate cuts at every policy meeting in 2025 following Thursday’s bigger-than-expected reduction, despite officials cautioning against an uninterrupted easing cycle.

By Akin Nazli in Belgrade The monetary policy committee (MPC) of Turkey’s central bank on December 26 cut its policy rate by 250bp to 47.5% (chart). The market was aware that a rate cut was on the cards.