Business circles welcome first interest rate cut in 22 months

ISTANBUL

Major business associations have welcomed the Central Bank’s move to start the easing cycle by delivering a 250 basis points cut in its policy rate, calling on lenders to follow suit.

The bank slashed the one-week repo auction rate to 47.5 percent only two days after the minimum wage for millions of workers was hiked by 30 percent to a net of 22,104 Turkish Liras ($628) per month.

The rate cut met expectations and will help improve predictability, commented Şekib Avdagiç, the president of the Istanbul Chamber of Commerce (İTO), adding that High funding costs are an obstacle to investment and trade.

“It is extremely important to establish a selective credit mechanism that will direct financing to production and investment,” Avdagiç stressed.

“Financing conditions in 2025 will be shaped by inflation, interest and exchange rate. As the business world, we are confident that a balance will be established between these three,” he said.

The interest rate cut is a promising development for 2025, according to Gürsel Baran, the president of the Ankara Chamber of Commerce (ATO).

Echoing Avdagiç, Baran said that the interest rate cut should continue in a way that will stimulate trade, investment, production and employment.

“We expect banks to support the real sector, especially small- and medium-sized enterprises, by reducing interest rates on loans,” Baran furthered.

The Central Bank took a step in line with exporting companies, said Mustafa Gültepe, the chair of the Türkiye Assembly of Exporters (TİM).

“We hope that the discounts, which I think will also cheer the market, will continue in parallel with the decline in inflation,” Gültepe furthered.