Türkiye should return to interest rate cuts as soon as this month, according to a chair of one of the country's top business associations, who says a delay would be "too late."

The Central Bank of the Republic of Türkiye (CBRT) had initiated its easing cycle in December after aggressive monetary tightening since mid-2023 helped ease inflation.

Inflation in June cooled to 35.1%, less than half the level it reached a year earlier. The better-than-expected print has renewed expectations that the central bank would begin cutting rates again this month.

The bank last cut in March before pausing as assets and the Turkish lira fell sharply after Istanbul Mayor Ekrem Imamoğlu was jailed pending trial over graft charges.

Although the policy rate currently stands at 46%, the central bank kept the overnight rate at around 49%. The market is closely monitoring the level of overnight rates for further signals on the policy path ahead.

"We believe that a 350-400 basis point interest rate cut in July would be appropriate," Burhan Özdemir, the head of the Independent Industrialists and Businessmen Association (MÜSIAD), said on Tuesday.

"If the rate cut happens in September instead of July, it would be too late," Özdemir told private broadcaster CNBC-e.

Özdemir went on to say that the value of the Turkish lira is not at the level exporters would want it to be, noting that the current real interest rate was too high relative to the exchange rate.

"We're in favor of allowing a bit more flexibility, and we think there should be a further increase, especially when looking at the dollar compared to the real policy interest rate," he said.

"Expectations are that it will range between 43 and 45, but from the exporter's point of view, it should not fall below 45," as of the end of the year, he added.

The lira has weakened by more than 11% so far this year. It traded at just above 40 against the dollar on Tuesday.

"When you look at the increase in the import volume index within the country, this has stopped being an issue that only affects exporters. It's actually a significant point for domestic producers who manufacture and sell within the country as well," Özdemir said.