Breaking News: Central Bank announces first interest rate decision of 2025!

The Central Bank of the Republic of Türkiye (TCMB) Monetary Policy Committee (PPK) met today under the chairmanship of Fatih Karahan.

At the critical meeting, which markets were closely watching, the first interest rate decision of 2025 was announced.

INTEREST RATE CUT BY 250 BASIS POINTS

In January, the TCMB cut the policy rate by 250 basis points, lowering the rate from 47.5 percent to 45 percent.

The Central Bank's interest rate cut decision was in line with market expectations.

"INFLATION EXPECTATIONS REMAIN A RISK FACTOR"

The following statements were included in the Central Bank's decision text:

’’While the underlying trend of inflation declined in December, leading indicators point to an increase in January consistent with projections. In this development, service items with high tendencies for time-dependent pricing and indexation to past inflation stand out. Core goods inflation remains relatively low. Indicators for the final quarter show that domestic demand is at levels supporting the decline in inflation. Although inflation expectations and pricing behaviors show a tendency to improve, they continue to be a risk factor for the disinflation process.

The determined stance in monetary policy strengthens the disinflation process through the rebalancing of domestic demand, real appreciation of the Turkish lira, and improvement in inflation expectations. Increased coordination with fiscal policy will also make a significant contribution to this process. The tight monetary policy stance will be maintained until a permanent decline in inflation and price stability are achieved. Accordingly, the policy rate will be determined in a way that provides the tightness required by the projected disinflation process, taking into account inflation realizations, the underlying trend, and expectations. The Committee will take its decisions with an inflation-focused, cautious, and meeting-based approach. In the event of a significant and permanent deterioration in the inflation outlook, monetary policy tools will be used effectively.

In case of developments outside of projections in credit and deposit markets, the monetary transmission mechanism will be supported with 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 also taking into account the lagged effects of monetary tightening, in a way that will reduce the underlying trend of inflation and ensure the monetary and financial conditions that will reach the 5 percent target in the medium term. Accordingly, all monetary policy tools will be used with determination. The Committee will take its decisions within a predictable, data-driven, and transparent framework.’’

FIRST INTEREST RATE CUT IN 22 MONTHS CAME IN DECEMBER

In December, the TCMB had cut the policy rate by 250 basis points to 47.5 percent. This marked the first interest rate cut in 22 months.

8 MEETINGS WILL BE HELD

The Central Bank had announced that it would hold 8 meetings instead of 12 in 2025.

The date for the second PPK meeting of the year was set for March 6.