The decline in loan and deposit interest rates continues: What will happen in 2024?

Trend of Decrease in Loan and Deposit Interest Rates

According to the data from the Central Bank of the Republic of Turkey (TCMB), loan and deposit interest rates continue to follow a declining trend in parallel with the decrease in the Central Bank's funding cost.

Interest Rates as of January 2024

As of January, the gap between loan interest rates and the policy rate is observed to be narrow. According to the updated data as of January 23, 2024, the main interest rate indicators in the market are as follows:

• Consumer loan interest rate: %45.5 (This type of loan has recorded the highest and most pronounced decrease.)
• Commercial loan interest rate: %38.4 (There is a continuously decreasing trend.)
• 1-3 month term TL deposit interest rate: %37.8
• TCMB weighted average funding cost: %37.3

2024 Year Forecasts and Interest Rate Trends

Chart analyses indicate that, by the middle of 2024, particularly consumer loan interest rates could rise above the %60 band. However, it is notable that a decrease in line with the TCMB's funding cost has been observed recently. It is emphasized that a gradual decrease in all interest rate indicators is expected starting from the beginning of 2025.

Interest and Liquidity Balance

The close correlation between deposit interest rates and the central bank's funding cost indicates that a balance of interest and liquidity is being achieved in the market. This situation shows that financial conditions have evolved to a point more compatible with the policy rate and that loan costs are moving away from their peak levels.