With holidays in Europe seemingly getting more and more expensive for sun-seeking Brits, last-minute holidaymakers will be delighted to hear that one iconic destination has made a major economic decision that will make spending a lot easier. In 2024, Turkey welcomed just under 53 million foreign tourists, a 6.9% increase compared to the previous year and well above pre-pandemic levels.
Tourists are drawn to the Euro-Asian nation for its rich history, stunning natural landscapes, beautiful beaches, and most importantly, its affordable travel options compared to other destinations in Europe. This theme is set to continue this summer, because Turkey’s central bank slashed its key interest rate by three points to 43% on Thursday (July 24). The step marked the first rate reduction since April, when the bank hiked rates to 46% in the wake of the controversial arrest of Istanbul Mayor Ekrem Imamoglu, which caused the Turkish lira to plummet. This comes as great news to tourists, as well as those looking to invest in the country, as lower interest rates make for a weaker domestic currency, meaning it is cheaper to exchange money, reducing the overall cost of their trip.
The move also suggests confidence in Turkey’s monetary policy committee, which has been working toward tackling inflation, which was 35.05% in June but has been steadily decreasing.
“The tight monetary policy stance, which will be maintained until price stability is achieved, will support the disinflation process through moderation in domestic demand, real appreciation in Turkish lira, and improvement in inflation expectations,” the central bank said in a statement accompanying the decision.
On this week’s decision, markets had priced in a 250-basis-point cut, so the reduction of 300 basis points surprised many analysts, some of whom have suggested that easing will likely slow down from here.
“The decision by the Turkish central bank to cut its one-week repo rate by 300bp today, to 43.00%, was a slight dovish surprise, but the accompanying communications remained hawkish,” Nicholas Farr, an emerging Europe economist at Capital Economics, wrote in a report following the decision, according to CNBC.
“We expect the pace of the easing cycle to slow down from here,” Farr wrote, forecasting the bank’s key interest rate to close the year at 37%.
This news comes as it was revealed last month that British travel firms had begun slashing the prices of holidays to Turkey and Greece amid tensions in the Middle East. According to reports on June 30, Jet2 Holidays, the biggest package holiday firm in the UK, had deals under £300 for a week’s holiday from East Midlands Airport to the Turkish resort of Bodrum for July 3 and Birmingham to Marmaris, Turkey for July 4. At the same time, a week’s stay in Majorca was on sale for a whopping £858 per person.