The Turkish central bank cuts interest rates for the first time since February 2023.

The Turkish central bank announced on Thursday a reduction in the benchmark interest rate to 47.5% from 50%, marking the first rate cut approved by the bank since February of last year, following signs of falling inflation and a slowdown in domestic demand.

The amount of the cut, which reached 175 basis points, exceeded analysts' expectations, and the Turkish central bank also narrowed the interest rate corridor to 300 basis points from 600, a move interpreted by some investors as hawkish.

The Turkish central bank confirmed that it will maintain a cautious approach to interest rate movements, explaining that its decisions will be based on data, and noted that future price changes will primarily depend on inflation trends.

In its monetary policy statement, the bank clarified that it made the decision in line with the declining trend of core inflation in December, but pointed out that seasonally adjusted monthly inflation rose in November, and inflation expectations remain above the targets for the next year.

Following the decision, the Turkish lira experienced only a marginal decline, falling by 0.1% against the US dollar, with the American currency reaching 35.2387 Turkish lira, while the Istanbul Stock Exchange 100 index rose by 1%.