The Turkish lira rallied Jan. 16 as the country's central bank eased its monetary policy at the slowest rate in nearly six months in what it described as a "measured" move.

The Türkiye Cumhuriyet Merkez Bankası AS lowered its one-week repo auction rate by 75 basis points to 11.25%, marking the fifth rate cut under the tenure of Governor Murat Uysal.

The consensus estimate of economists polled by Trading Economics was for a 50-basis-point rate cut. The median forecast of Reuters and Bloomberg polls were for a 50-point and 75-point cut, respectively.

The Turkish lira climbed 0.4% against the dollar around 7:20 a.m. ET.

Unless downward pressure on the lira is back, more cuts are expected this year, though easing will not be as aggressive as in the second half of 2019 and will be delivered more gradually, Brown Brothers Harriman & Co. Global Head of Currency Strategy Win Thin wrote.

The central bank said the economy is recovering but investment demand and exports remain weak.

Smaller, but consistent, rate cuts are expected until the policy rate is in the single digits, TD Securities Head of Emerging Markets Strategy Cristian Maggio and Emerging Markets Strategist Izidor Flajsman said. President Recep Tayyip Erdoğan wants to bring the benchmark rate in single digits.

The central bank said the inflation outlook continued to improve, adding, "the course of inflation is considered to be broadly in line with the year-end inflation projection."

Annual inflation stood at 11.8% in December 2019, compared to a target of 8.2% at the end of 2020, Bloomberg News reported.