Central Bank to announce interest rate decision today: Will rate cuts continue, what are the expectations?

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

Following the critical meeting, the interest rate decision for March will be announced today at 14:00.

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

Most recently, the committee met on January 23 and decided to continue the rate-cutting process, lowering the policy rate to 45 percent.

In the committee's previous decision text, it was emphasized that "tight monetary policy will be maintained until a permanent decline in inflation and price stability are achieved," and the statements "In this direction, the policy rate will be determined in a way that will provide the tightness required by the projected disinflation process, taking into account inflation realizations, the main trend, and expectations" were used.

INFLATION DATA RELEASED

The Turkish Statistical Institute (TÜİK) shared the inflation data for February with the public at the beginning of the week.

According to the released data, while inflation was calculated at 2.27 percent in February, annual inflation fell below 40 percent for the first time in 20 months, recorded at 39 percent.

On the other hand, the Inflation Research Group (ENAG) announced that inflation in February was 3.37 percent on a monthly basis and 79.51 percent on an annual basis.

ECONOMISTS EXPECT A 250 BASIS POINT CUT

Due to the slowdown in inflation, the Central Bank is expected to continue its interest rate cuts.

According to the Anadolu Agency survey, economists predict that interest rates will be lowered by 250 basis points to 42.5 percent.

Former Central Bank Chief Economist Prof. Dr. Hakan Kara also expressed a similar expectation in a post on his social media account. Kara stated, "For tomorrow's CBRT meeting, my personal wish is a 200 basis point cut, but my prediction is a 250 basis point cut. Could it be more than 250? Such a decision would disrupt expectations and cause a loss of foreign exchange reserves, so the probability of it happening is very low."

Following inflation that rose to 85.5 percent in October 2022, the Central Bank abandoned its low-interest-rate policy in June 2023 and moved to sharp interest rate hikes, raising the policy rate from 8.5 percent to 50 percent within one year.