“More Interest Rate Cuts in 2025”: Turkey’s President Tayyip Erdogan

On December 26,2024 the Turkey’s Central Bank lowered the main interest rate from 50 percent to 47.5 percent for the first time since twenty four months. There are robust reasons behind this decision of the Central Bank which includes slow inflation leading to decline, slowdown in domestic demand, and the 18-month tightening cycle.

Following this revolutionary decision of the Central Bank of Turkey, On Saturday, Turkey’s President Tayyip Erdogan announced that,

“Priority in our economic programme is to lower inflation… We will hopefully reduce inflation to the required level by using other tools at our disposal in addition to the monetary policy.

We will definitely start lowering the interest rates. 2025 will be the landmark year for this. Interest rates will decrease so that inflation will decrease. We will take this step. This is now indispensable for us” 

Previously, the Central Bank has reduced the number of scheduled policy meetings which was twelve in 2024 to eight in 2025. And it is believed that it could attract attention on the global stage.

Why could this “interest cut” attract global interest?

The 47.5 percent interest deduction by the Central Bank of Turkey is expected to uplift the economy of the country stimulated by the foreign investment opportunities in the pivotal sectors such as technology, construction, telecommunications, textiles and more. This could contribute significantly to economic growth. The other factors which include trade partnership that can be increased due to its geological location between Europe and Asia, the trademark places for the international business. This could also increase the currency value of Turkey, it helps to control the external debts.

Though the official announcement of Erdogan could attract a large amount of foreign investment and trading opportunities, many experts argue that it depends majorly on the monetary policy of Turkey which aligns perfectly with the global expectations.