06.03.2025 14:10
The Central Bank's Monetary Policy Committee met under the chairmanship of Fatih Karahan. Following the meeting, the second interest rate decision of the year was announced. Accordingly, the interest rate was reduced by 250 basis points, from 45% to 42.5%.
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The Central Bank of the Republic of Turkey (CBRT) Monetary Policy Committee (MPC) has reduced the policy rate, the one-week repo auction interest rate, by 250 basis points to 42.5%.
THE INTEREST RATE WAS ALSO REDUCED BY 250 BASIS POINTS AT THE PREVIOUS MEETING
The Central Bank's Monetary Policy Committee (MPC) decided to announce interest rates 8 times instead of 12 times in 2025. In its first meeting of the year held in January, the Bank reduced the interest rate from 47.5% by 250 basis points to 45%. Additionally, the minutes of the bank indicated that the interest rate remained high, signaling a potential decrease.
"INFLATION RATES ARE ON A DECLINING TREND"
In a statement made after the CBRT Monetary Policy Committee meeting, it was stated: The main trend of inflation has declined in February following the increase in January. During this period, core goods inflation has maintained a relatively low level, while service inflation has slowed down after a January-specific increase. Although domestic demand was above expectations in the fourth quarter, it has remained at levels supportive of the decline in inflation. Leading indicators suggest that this supportive outlook has continued into the first quarter of the year. The effects of the monetary policy stance on credit and deposit markets and domestic demand are being closely monitored. While inflation expectations and pricing behaviors show 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 regard, the policy rate will be determined in a way that provides the necessary tightness required by the anticipated disinflation process, taking into account inflation realizations, the main trend, and expectations. The Committee will determine the steps to be taken regarding the policy rate with a focus on the inflation outlook, a cautious approach, and a meeting-based strategy. If a significant and permanent deterioration in inflation is anticipated, monetary policy tools will be used effectively.
ADDITIONAL STEPS FOR THE MONETARY TRANSMISSION MECHANISM ARE POSSIBLE
Considering the recent developments in credit growth, additional steps have been taken to maintain macro-financial stability and support the tight monetary stance. If developments in the credit and deposit markets deviate from expectations, the monetary transmission mechanism will be supported by additional macroprudential measures. Liquidity conditions will continue to be closely monitored, and sterilization tools will be used effectively.
"INFLATION TARGET IS 5%"
The Committee will determine its policy decisions by taking into account 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 achieve the inflation target of 5% in the medium term. In this regard, all monetary policy tools will be used decisively. The Committee will make its decisions within a predictable, data-driven, and transparent framework.
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