23.01.2025 14:10
The Central Bank has reduced the interest rate by 250 basis points to 45%. The Central Bank of the Republic of Turkey (CBRT) announced its interest rate decision for January. In the statement, it was said, "The Monetary Policy Committee (Committee) has decided to lower the policy rate, which is the one-week repo auction rate, from 47.5% to 45%."
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The Central Bank of the Republic of Turkey (CBRT) announced its first interest rate decision for 2025. The interest rate was reduced by 250 basis points to 45 percent. The interest rate decision for January was announced. In the statement, it was said, "The Monetary Policy Committee (Committee) has decided to reduce the policy interest rate, which is the one-week repo auction interest rate, from 47.5 percent to 45 percent."
The Central Bank's statement included the following expressions:
While the main trend of inflation declined in December, leading indicators point to a compatible increase in January. In this development, high service items with time-dependent price determination and a tendency to index to past inflation stand out. Core goods inflation, on the other hand, remains relatively low. Indicators for the last quarter show that domestic demand is at levels supportive of the decline in inflation. Although inflation expectations and pricing behaviors exhibit a tendency to improve, they continue to pose a risk factor in terms of the disinflation process.
"TIGHT MONETARY POLICY WILL CONTINUE"
The determined stance in monetary policy strengthens the disinflation process through balancing domestic demand, real appreciation of the Turkish lira, and improvement in inflation expectations. The increasing coordination of fiscal policy will also make significant contributions to this process. The tight monetary policy stance will be maintained until a permanent decrease in inflation and price stability is achieved. In this direction, the policy interest rate will be determined in a way that provides the tightness required by the anticipated disinflation process, taking into account inflation realizations, the main trend, and expectations. The Committee will make its decisions with a focus on the inflation outlook, cautiously and on a meeting-by-meeting basis. If a significant and permanent deterioration in inflation is anticipated, monetary policy tools will be used effectively.
ADDITIONAL MEASURES MAY BE ON THE AGENDA
If developments occur in the credit and deposit markets beyond expectations, the monetary transmission mechanism will be supported by additional macroprudential steps. Liquidity conditions will be closely monitored, and sterilization tools will continue to be used effectively with additional measures.
The Committee will determine its policy decisions by considering the lagged effects of monetary tightening, in a way that will reduce the main trend of inflation and provide the monetary and financial conditions to reach the medium-term inflation target of 5 percent. In this direction, all monetary policy tools will be used decisively. The Committee will make its decisions within a predictable, data-driven, and transparent framework. The Monetary Policy Committee Meeting Summary will be published within five business days.
COMMON EXPECTATION WAS FOR A 250 POINT DECREASE
Expectation surveys conducted before the CBRT's interest rate decision indicated that an interest rate cut was highly likely. Economists' forecasts were as follows:
AA Expectation Survey: 250 basis point cut
Deutsche Bank: 250 basis point cut
Morgan Stanley: 250 basis point cut
Societe Generale: 250 basis point cut
Additionally, the median of economists' expectations for the policy interest rate at the end of 2025 was recorded as 30 percent.
2025 CBRT MPC MEETING CALENDAR
Unlike previous years, the CBRT will hold a total of 8 meetings this year. According to the published calendar, the CBRT MPC will skip the months of February, May, June, and November. The dates of the 8 meetings are as follows:
January 23 (1st meeting) → March 6 (2nd meeting) → April 17 (3rd meeting) → June 19 (4th meeting) → July 24 (5th meeting) → September 11 (6th meeting) → October 23 (7th meeting) → December 11 (8th meeting)
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