24.07.2025 16:00
The Monetary Policy Committee of the Central Bank of the Republic of Turkey reduced the interest rate by 300 basis points, lowering it from 46% to 43%. This marks the first interest rate cut by the Central Bank since March.
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The Monetary Policy Committee of the Central Bank of the Republic of Turkey convened under the chairmanship of Yaşar Fatih Karahan.
The Committee decided to reduce the policy interest rate, which is the one-week repo auction rate, from 46% to 43%. The Committee also lowered the Central Bank's overnight lending rate from 49% to 46%, and the overnight borrowing rate from 44.5% to 41.5%.
IT WAS KEPT CONSTANT IN JUNE
The Central Bank started interest rate cuts in the December 2024 meeting and, by making 250 basis point cuts in three consecutive meetings, had a total interest rate reduction of 750 basis points. In March, the TCMB raised the lending rate to 46.00% with a 400 basis point increase during an interim meeting. In April, the lending rate was increased from 46.00% to 49.00%, and the borrowing rate was raised from 41.00% to 44.50%. Most recently, in the June meeting, the Bank decided to keep the rates unchanged.
"THE DISINFLATION PROCESS IS BEING CLOSELY MONITORED"
The Central Bank's statement is as follows:
"The Monetary Policy Committee (the Committee) has decided to reduce the policy interest rate, which is the one-week repo auction rate, from 46% to 43%. The Committee has also lowered the Central Bank's overnight lending rate from 49% to 46%, and the overnight borrowing rate from 44.5% to 41.5%.
The main trend of inflation remained stable in June. Leading indicators suggest that monthly inflation will temporarily rise due to month-specific factors in July. Recent data indicate that the disinflationary effect of demand conditions has increased. The potential effects of geopolitical developments and rising protectionism in global trade on the disinflation process are being closely monitored. Inflation expectations and pricing behaviors continue to pose a risk factor for the disinflation process.
The tight monetary policy stance, which will be maintained until price stability is achieved, will support the disinflation process through demand balancing, real appreciation of the Turkish lira, and improvement in inflation expectations. The coordination of fiscal policy will contribute to this process. The Committee will determine the steps to be taken regarding the policy interest rate in a way that ensures the tightness required by the anticipated disinflation, taking into account inflation realizations, the main trend, and expectations. The magnitude of the steps will be reviewed with a focus on the inflation outlook, on a meeting basis, and with a cautious approach. If a significant and persistent deterioration in inflation is anticipated, all monetary policy tools will be used effectively.
If there are developments in the credit and deposit markets that are outside expectations, the monetary transmission mechanism will be supported by additional macroprudential steps. Liquidity conditions will be closely monitored, and liquidity management tools will continue to be used effectively.
The Committee will determine policy decisions in a way that will provide the monetary and financial conditions to bring inflation to the medium-term target of 5%. The Committee will make its decisions within a predictable, data-driven, and transparent framework.
The Summary of the Monetary Policy Committee Meeting will be published within five business days."
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