Banks take interest rate action ahead of Central Bank decision
As markets await the Central Bank's interest rate decision, banks have begun pricing in the possibility of a rate cut by the end of the year. A clear decline is being observed in TL deposit interest rates from the high levels seen in the first half of the year.
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Global markets are seeing a mixed trend following the US Federal Reserve's (Fed) 50 basis point interest rate cut, while domestically, the monetary policy decisions to be taken by the Central Bank of the Republic of Turkey (TCMB) are being awaited with curiosity.
Economists have calculated their year-end policy rate expectations at 46.65 percent.
The dollar/TL exchange rate moved within a narrow band yesterday, closing at 34.0763, and is trading at 34.0640 with a flat trend at the opening of the interbank market today.
Analysts state that in addition to the CBRT's interest rate decision, the international investment position and weekly money and banking statistics will be monitored, while abroad, the Bank of England's (BoE) interest rate decision in the UK, and the current account balance, weekly jobless claims, leading index, and existing home sales in the US will be followed.
From a technical perspective, the 9,900 and 10,000 levels are resistance, while 9,700 and 9,600 points are support levels for the BIST 100 index.
While experts expect the interest rate cut cycle to begin by the end of the year or in the first quarter of 2025, the banking sector is pricing this expectation into standard Turkish Lira deposit interest rates.
Deposit interest rates, which were above 50 percent in the first half of the year, began to decline after the summer months. At the end of June, the standard TL deposit interest rate for maturities up to 6 months was set at 47 percent, while the rate for maturities between 6 months and 1 year was set at 43.5 percent.
According to a report by Ekonomim.com, following the announcement of June inflation data on July 8, interest rates on deposits with maturities of up to 6 months have fallen to 40 percent.
Longer-term deposit interest rates have declined to the 38-34 percent range. Currently, 6-month deposit interest rates are at 36-34 percent, while deposits with maturities longer than 6 months are at 34-32 percent levels. Deposit interest rates for maturities up to 1 year have been set at 32-30 percent, and for maturities longer than 1 year, at a maximum of 30 percent.