Foreign investors are flocking to Turkey's local debt markets, saying they are impressed by interest rate cuts and easing inflation and are hoping that a regional transformation could further boost their bets on the economy.

The central bank reduced its one-week repo rate to 45% from 47.5% as a cycle of higher borrowing costs bears fruit in cooler price rises.

Turkey's central bank cut its key interest rate by 250 basis points to 45% as expected on Thursday, carrying on an easing cycle it launched last month alongside a decline in annual inflation that is seen continuing through the year end.