Turkey Central Bank's January Interest Rate Decision

Central Bank of the Republic of Turkey Announces Interest Rate Decision

The Central Bank of the Republic of Turkey (CBRT) decided to lower the policy interest rate at the Monetary Policy Committee (MPC) meeting in January. The one-week repo auction interest rate has been reduced to 37%, in line with expectations. In the meeting held in December, the interest rate was decreased from 39.5% to 38%.

Interest Rate Expectations and Analyses

The expectations of economists regarding the anticipated interest rate cut by the CBRT were compiled from surveys. The anticipation of 46 economists participating in the AA Finance survey was for the interest rate to be reduced by 150 basis points. These forecasts varied between 36% and 37%.

Inflation Data and Its Effects

Inflation is also drawing attention with the data announced by the Turkish Statistical Institute (TÜİK). Monthly inflation in December increased by 0.89%, reaching an annual rate of 30.89%. Among the annual change rates, an increase of 28.31% was recorded in food and non-alcoholic beverages, 28.44% in transportation, and 49.45% in housing. The 12-month average inflation was determined to be 34.88%.

Long-Term Inflation and Dollar Predictions

As a result of the Market Participants Survey conducted by the CBRT in January, the participants' inflation expectation for the end of the current year was set at 23.23%. In the previous period, this rate was 23.35%. The inflation expectation for 12 months ahead decreased from 23.35% to 22.20%. The inflation expectation for 24 months ahead fell from 17.45% to 16.94%.

Additionally, the participants' year-end dollar/TL expectation was recorded as 51.17 TL. For 12 months ahead, this rate was projected as 51.89 TL based on previous estimates.

This information does not constitute investment advice.