The Central Bank of the Republic of Turkey (CBRT) cut its key interest rate by 25 base points to 7.5 percent. The Monetary Policy Committee of the bank held its February meeting yesterday and announced that they decreased the one-week repo rate, also known as the key interest rate, to 7.5 percent from 7.75 percent, which was cut by 50 base points at the January meeting. The bank further decreased the marginal funding rate by 50 base points from 11.25 percent to 10.75 percent and cut the borrowing rate by 25 base points from 7.5 percent to 7.25 percent. The marginal funding and borrowing rates were kept on hold by the bank for six months in a row. The rate cut for the policy matched analyst expectations, but the cut in the marginal funding rate corridor, a rate particularly critical for bank lending, was larger than analysts had predicted.Markets followed the decision closely. The bank has insisted on keeping rates high for price stability, which is criticized by the government and even by President Recep Tayyip Erdoğan. The major drive of the criticisms and the CBRT's insistence was inflation. Inflation has recently followed a downward trend and it is expected to further decrease. The critical inflation rate data for January 2015 has been announced as 1.1 percent and the annual inflation rate has been announced as 7.24 percent with a decrease of 0.93 points, which is the lowest inflation in 19 months. However, even the lowest inflation in 19 months failed to impress the central bank, which had announced before the data was released that it will hold an extra meeting to cut rates if inflation decrease by one point.Erdoğan called on the bank to decrease the rates by pointing to declining oil prices, which contributes to the reduction of the current account deficit - one of the country's main economic obstacles. The bank's January interest rate cut was harshly criticized by the president for not contributing to the decline of the cost of production.The Turkish lira began falling against the U.S. dollar since the bank announcement for further interest rate cuts, setting records as parity reached 2.5015. The lira has declined more than 4.4 percent against the dollar since the beginning of the year, which has become a significant dilemma for the bank.Daily Sabah economist and Nişantaşı University President Kerem Alkin said that the CBRT showed the markets that they treat the job delicately and maintain the bank's duty to sustain price stability. "They also showed their sensitivity to decreasing credit costs; however, they asked for time for further cuts to follow inflation and global economies," Alkin said. Prime Minister Ahmet Davutoğlu said that the downward trend of interest rates is positive and added "but we renew our opinion that it should decrease with more momentum."