The Central Bank of the Republic of Turkey (TCMB) lowered the policy rate by 250 basis points to 47.5 percent at its Monetary Policy Committee meeting in December. This was the first interest rate cut in a long time. Expectations for an interest rate cut had increased, especially after the minimum wage was determined as 22,104 TL.
TCMB reduced interest rate by 250 basis points
According to the statement made by the Central Bank, "The one-week repo auction interest rate has been reduced by 250 basis points. In addition, it has been decided that overnight borrowing and lending rates will be determined with a margin of -/+ 150 basis points compared to the repo rate." According to experts, although the aim of the interest rate cuts is to stimulate economic activity, there are different views on the effects of this policy on inflation.
Economists say that lowering interest rates is a policy aimed at encouraging growth. Low interest rates increase economic activity by easing pressure on investment and consumption. However, it should not be ignored that this situation can also increase inflationary pressures. The CBRT's interest rate cut in December, after keeping interest rates constant in November, attracted investors' attention.
The effects of the interest rate decision in December began to show themselves in foreign exchange, gold, stock market and deposit rates. The fluctuations in financial markets and investment decisions responded quickly to this move by the CBRT. In addition, economists' average policy rate expectation of 29.5 percent for the end of 2025 is noteworthy.
Although the aim of the interest rate cut was determined to support economic growth, the effects of this policy on inflation and financial balance in the medium and long term should be monitored carefully. Interest rate trends in global markets and FED policies will also be among the important factors affecting decisions in Turkey. This step by the TCMB is considered an important turning point aimed at increasing mobility in the economy and using policy tools in a balanced manner. The results of this policy and possible new moves will be monitored in the coming months.
The impact of interest rate cuts on the cryptocurrency market
The interest rate cut by the Central Bank of the Republic of Turkey has also had an impact on the cryptocurrency market. The decrease in interest rates reduces the return to be obtained from traditional investment instruments and this increases the interest in risky assets. Especially with the increase in inflation expectations, investors are turning to Bitcoin and other crypto assets in order to protect themselves from inflation. In addition, the possibility of the Turkish Lira losing value may also increase the use of stablecoins. However, fluctuations in the cryptocurrency market and global macroeconomic factors should also be taken into consideration. These trends carry uncertainty in the short term.