The Central Bank of the Republic of Türkiye (CBRT) kept interest rates steady at 50 percent for the sixth consecutive month. The Monetary Policy Committee decided to maintain the one-week repo auction rate, which serves as the policy rate, at this level.
Cumulative rate hikes since June 2023
Since June 2023, the CBRT has enacted a cumulative increase of 4,150 basis points, raising the interest rate from 8.5 percent in June 2023 to 50 percent by March 2024. The specific rate hikes are as follows:
- June 2023: 8.5 percent to 15 percent (up 650 basis points)
- July 2023: 15 percent to 17.5 percent (up 250 basis points)
- August 2023: 17.5 percent to 25 percent (up 750 basis points)
- September 2023: 25 percent to 30 percent (up 500 basis points)
- October 2023: 30 percent to 35 percent (up 500 basis points)
- November 2023: 35 percent to 40 percent (up 500 basis points)
- December 2023: 40 percent to 42.5 percent (up 250 basis points)
- January 2024: 42.5 percent to 45 percent (up 250 basis points)
- March 2024: 45 percent to 50 percent (up 500 basis points)
Monitoring inflation and economic impact
The committee continues to monitor the effects of monetary tightening on loans and domestic demand. Although the policy rate remains unchanged, the committee is vigilant about inflation risks due to the delayed impact of monetary policy adjustments.
Future policy directions
The CBRT plans to maintain its tight monetary policy until a clear and sustained decrease in core inflation is observed, and inflation expectations align with the targeted range. Should inflation significantly and persistently deteriorate, further monetary tightening may be considered.
Implications for investors
The Central Bank of the Republic of Türkiye’s interest rates stance carries significant implications for investors, according to some analysts. The maintained 50 percent interest rate, though anticipated, reflects cautious optimism amid stabilizing inflation. Potential interest rate cuts expected around November could impact market movements, particularly in sectors sensitive to interest rates. With forecasts suggesting a 20 percentage point drop by the end of 2025, investors should carefully consider the timing and scale of these adjustments when planning their strategies.
From tightening to easing
Türkiye’s current monetary policy is part of a broader economic shift. The transition from aggressive tightening to potential rate easing by year’s end illustrates a response to evolving inflation dynamics. This approach fits within a global trend of economic recalibration post-pandemic, where nations must balance growth stimulation with inflation management. The central bank’s willingness to tighten policies further if the economic outlook worsens highlights the ongoing challenge of maintaining stability in a volatile environment.
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