Turkey's central bank slowed its easing cycle on Thursday by lowering its policy interest rate by 250 basis points to 40.5%, a slightly bigger cut than expected, after higher-than-expected inflation and economic growth and amid rising political risk.

At its previous meeting in July the bank had cut rates by a more-than-expected 300 basis points as it resumed an easing cycle that had been temporarily reversed by political turmoil earlier this year.

In a Reuters poll, all 18 economists had expected a cut in the one-week repo rate, with the median forecast 200 basis points. Rate predictions ranged from 40% to 41.50%.

Political risks flared in markets last week when a Turkish court ousted the Istanbul provincial head of the main opposition Republican People's Party (CHP), dealing a fresh judicial blow to President Tayyip Erdogan's opponents.

In April, the bank hiked the policy rate to 46%, reversing an easing cycle that had begun in December, following market volatility over the arrest in March of Istanbul's CHP mayor Ekrem Imamoglu, who is Erdogan's main rival.

Turkish annual inflation came in higher than expected at nearly 33% in August while Turkey's economy exceeded expectations with growth of 4.8% in the second quarter, data showed last week.

Most poll respondents expect easing to continue in the months ahead, with the policy rate falling to 37% by the end of 2025.

(Reporting by Ezgi Erkoyun and Nevzat Devranoglu; Writing by Daren Butler; Editing by Jonathan Spicer)