Breaking News... Central Bank announces interest rate decision!

The Central Bank of the Republic of Türkiye (CBRT) Monetary Policy Committee (MPC) met today (March 6) under the chairmanship of Fatih Karahan.

Following the meeting, which had the eyes and ears of the markets turned toward it, the interest rate decision was announced.

The CBRT Monetary Policy Committee implemented a 250 basis point cut, reducing the policy rate from the 45 percent level to 42.5 percent.

With this decision, the CBRT has cut interest rates for the third consecutive meeting.

"DECLINE IN INFLATION WILL CONTINUE"

The following statements were included in the Central Bank's Monetary Policy Committee text:

"The underlying trend of inflation declined in February following the increase in January. During this period, while core goods inflation maintained its relatively low course, services inflation slowed down following the increase specific to January.

Although domestic demand was above expectations in the fourth quarter, it remained at levels supporting the decline in inflation. Leading data suggest that this supportive outlook has continued in 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.

Although inflation expectations and pricing behaviors show a tendency to improve, they continue to be a risk factor for the disinflation process.

"TIGHT MONETARY POLICY STANCE WILL BE MAINTAINED"

The decisive 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 of 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.

In this direction, 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 determine the steps to be taken regarding the policy rate with an inflation-focused, cautious, and meeting-based approach.

In the event that a significant and permanent deterioration in inflation is foreseen, monetary policy tools will be used effectively.

ADDITIONAL STEPS TAKEN FOR TIGHT STANCE

Considering recent developments in credit growth, additional steps have been taken to maintain macro-financial stability and support the tight monetary stance.

In the event of developments outside of expectations in credit and deposit markets, the monetary transmission mechanism will be supported with additional macroprudential steps.

Liquidity conditions will continue to be closely monitored and sterilization tools will continue to be used effectively.

EMPHASIS ON 5 PERCENT TARGET

The Committee will determine its policy decisions in a way that will provide the monetary and financial conditions that will reduce the underlying trend of inflation and reach the 5 percent target in the medium term, also taking into account the delayed effects of monetary tightening.

In this direction, all monetary policy tools will be used decisively. The Committee will take its decisions within a predictable, data-driven, and transparent framework."

WHEN DID THE INTEREST RATE CUTS BEGIN?

In its meeting on December 26, the Central Bank cut interest rates for the first time in nearly two years, reducing the policy rate by 250 basis points from the 50 percent level to 47.5 percent.

Most recently, the committee, which met on January 23, decided to continue the interest rate cut process and lower the policy rate to 45 percent.