How much is the monthly return on 100,000 TL?

The Central Bank of the Republic of Turkey (TCMB) lowered its policy rate from 50 percent to 47.5 percent, a cut of 250 basis points, at today's Monetary Policy Committee (PPK) meeting.

The prevalence of expectations for a similar trend in 2025 is a point of concern for investors who earned considerable income from deposit interest in 2024.

Dünya newspaper columnist Ufuk Korcan, in his article titled 'The appeal of TL deposits will continue in 2025', stated: "If the policy rate continues to be cut at the same rate until the end of 2025, those who invest their 100,000 TL in deposits will earn a cumulative net gain of 43,115 TL by the end of the year."

Highlights from Korcan's article are as follows:

"Interest rate cuts are expected to continue domestically in 2025.

According to the latest Survey of Market Participants released by the Central Bank, inflation is expected to be 27.07 percent on average by the end of 2025, and the policy rate (1-week repo) is expected to be at the 30.88 percent level.

It is observed that institutions' year-end inflation forecasts are around 27-30 percent.

Based on calculations assuming that the policy rate is cut by 250 basis points in all 8 PPK meetings to be held in 2025 and that the current spread between deposit rates and the policy rate is maintained, it is understood that Turkish Lira deposits will maintain their appeal in the new year.

It is calculated that a saver who keeps their money in a deposit account from one PPK meeting day until the next will achieve a cumulative return of over 40 percent by the end of the year and will continue to earn a return above expected inflation.

Specifically, the policy rate is currently at 47.5 percent. Bank deposit rates are around 50 percent.

Those who invested their 100,000 liras in a 28-day TL deposit account on the day of the last PPK meeting until the next meeting date on January 23 will earn 3,452 TL in net interest income.

For example, let's assume there is a 250 basis point cut at the meeting on January 23 and the deposit rate falls to 47.5 percent.

Those who reinvest their interest income by adding it to their principal on the same day until the next meeting date, i.e., in 42 days, will earn 5,089 TL this time.

When we repeat these transactions until December 31, 2025, 100,000 TL will reach 143,115 TL by the end of the year. In other words, the deposit investor will achieve a cumulative return of 43.11 percent in 1 year.

Therefore, although we have entered an interest rate cutting cycle, it seems difficult to talk about the appeal of deposits diminishing at this stage."