Business leaders' responses to the Turkish Central Bank's interest rate reductions
The Turkish Central Bank (CBRT) has made a significant move in July 2025, reducing the interest rate by a surprising 300 basis points, bringing the policy rate down to 43%[1][2][3][4]. This decision, which exceeded Deutsche Bank's forecast of a 250 basis point cut, is expected to have a positive impact on Turkey's business and economic landscape.
The interest rate cut aims to reduce Turkey's high borrowing costs, potentially stimulating investment and consumption amid increasing global uncertainties and protectionism[1][2]. Easing borrowing costs could support economic growth, making it easier for businesses and consumers to access credit. This is particularly beneficial for small and medium enterprises (SMEs), which are expected to find it easier to secure financing[5].
Inflation in Turkey has been easing, with annual inflation at 35.05% in June 2025, down from previous highs of 75% in mid-2024[2]. The CBRT views the underlying inflation trend as flat, enabling it to reduce rates without immediate inflationary risk, though some temporary inflationary pressures are expected in July due to one-off factors[2].
The rate cut reverses much of the previous sharp hikes made in April 2025, when rates were raised to 46% due to geopolitical tensions and currency pressure[1][3]. The bank’s asymmetric interest rate corridor remains, preserving flexibility to react to exchange rate shocks and safeguard reserves[1][3]. This move towards market easing is viewed by Deutsche Bank as a sign of cautious easing in monetary policy[6].
The CBRT has indicated that future easing will continue but with caution and meeting-by-meeting assessment, suggesting a gradual approach to rate cuts to balance growth support and inflation control[2][3]. However, deeper and faster interest rate cuts may be needed to maintain momentum in industry, according to Mustafa Gultepe, President of the Turkish Exporters Assembly (TIM)[7].
The interest rate cut was welcomed by the business community in Turkey and globally. Nail Olpak, Chairman of the Foreign Economic Relations Board (DEIK), described the decision as a "confidence-building step," while Gursel Baran, President of the Ankara Chamber of Commerce (ATO), stated that the reduction would improve the trade, investment, and production environment[4][8].
Despite the rate cut, interest rates remain high, according to Nail Olpak. He emphasized the need for long-term and accessible financing to support investment and production[9]. Gursel Baran also emphasized the need for additional steps to increase SMEs' access to finance[10].
In conclusion, the interest rate cut is a positive step towards reducing Turkey's high borrowing costs and stimulating economic activity after previous tightening. However, external inflationary pressures and economic uncertainties remain constraints in the near term. The CBRT will continue to monitor the inflation outlook and make decisions on a meeting-by-meeting basis to ensure a balanced approach to growth support and inflation control.
- The interest rate cut in Turkey, with the policy rate now at 43%, is expected to have positive effects on Ankara's business and economic landscape, possibly stimulating investment and consumption.
- Easing borrowing costs, as a result of the Turkish Central Bank's move, could support economic growth in Turkiye, making it simpler for businesses and consumers to secure financing, particularly benefiting small and medium enterprises (SMEs).
- Although the CBRT has reduced interest rates in July 2025, they remain high, according to Nail Olpak, highlighting the need for long-term and accessible financing to support investment and production in the future.
