The Monetary Policy Committee (PPK) of the Central Bank of the Republic of Turkey (CBRT) met under the chairmanship of Central Bank Governor Fatih Karahan.
The Monetary Policy Committee (Board) decided to reduce the one-week repo auction rate, which is the key interest rate, from 47.5 percent to 45 percent.
“Inflation expectations show an improving trend”
The following statements were made regarding interest rates in the press release:
While the main trend of inflation fell in December, preliminary data suggests an increase in line with January forecasts. In this development, service items stand out as they have a high tendency to time-dependent price determination and indexation to past inflation. Inflation for core goods remains relatively low.
Indicators for the last quarter show that domestic demand has reached a level that supports the decline in inflation. Although inflation expectations and price behavior are improving, they continue to represent a risk factor with regard to the disinflation process.
“The decisive stance of monetary policy strengthens the disinflation process.”
decisive stance in monetary policy; It strengthens the disinflation process by balancing domestic demand, real appreciation of the Turkish lira and improving inflation expectations. Increased coordination of fiscal policy will also contribute significantly to this process. The tight monetary policy stance will be maintained until a sustained decline in inflation and price stability is achieved. The key interest rate is in this direction; It is decided to ensure the rigor required for the planned inflation reduction process, taking into account the evidence on inflation and key trends and expectations. The Board will make its decisions using a cautious and meeting-based approach focused on the inflation outlook. When a significant and sustained deterioration in inflation is predicted, monetary policy instruments are used effectively.
“All monetary policy instruments will be used decisively”
In the event of unforeseen developments in the credit and deposit markets, the monetary transmission mechanism is supported by additional macroprudential steps. Liquidity conditions will be closely monitored and sterilization tools will continue to be used effectively with additional measures.
The Board will make policy decisions to contain the main trend of inflation and to create monetary and financial conditions that bring inflation to the 5 percent target over the medium term, taking into account the lagged effects of monetary tightening. All monetary policy instruments will be used decisively.
The Board will make its decisions in a predictable, data-driven and transparent framework.
The second interest rate decision of this year will be announced on March 6, 2025
CBRT announced in December that it would hold eight MPC meetings in the 2025 calendar. The bank will announce the interest rate decision at this year's 2nd MPC meeting on March 6, 2025.
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