07.02.2025 14:31
In January 2025, the Central Bank's decision to cut interest rates by 250 basis points raised questions about whether it would continue to lower rates in future meetings. In the meeting where the first inflation report of the year was announced, Central Bank President Fatih Karahan responded to the question, "Will interest rate cuts continue?" by saying, "We are not on autopilot in any way. We will evaluate all options."
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In December 2024, the Central Bank started interest rate cuts, reducing the interest rate for the first time in 22 months. After a 250 basis point cut in December, the interest rate was lowered to 45% with another 250 basis point cut in January 2025.
THE QUESTION OF INTEREST CAME UP AT THE MEETING
While it remains a question whether the Central Bank will continue to cut interest rates in upcoming meetings, the question of interest was directed to Central Bank President Fatih Karahan during the meeting where the first inflation report of the year was announced.
"WE ARE CLOSELY MONITORING INFLATION EXPECTATIONS"
Karahan provided a noteworthy response to the question from participants, "Will interest rate cuts continue?" He stated, "As always, we look at inflation developments when making interest rate decisions. While monitoring these, we closely observe domestic demand balance, pricing behaviors, and inflation expectations. To summarize, the demand conditions are at a disinflationary level."
"WE ARE DATA-DRIVEN"
Considering the demand conditions and expectations, we assessed that there is room for a cut, and we waited quite a while for this. We are not on autopilot in any way. We go from meeting to meeting. We are data-driven. We evaluate that we have a certain space, but being cautious is quite valuable here.
"THE MAGNITUDE OF THE STEPS MAY CHANGE"
We will act in a way that will not disrupt the inflation outlook and will not lead to a deterioration in demand conditions. In case of a deterioration in the outlook, we will evaluate all options, including changing the magnitude of the steps or stopping.
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