TCMB Begins Long-Awaited Rate Cut Cycle (12.27.2024)

The Central Bank of the Republic of Turkey (TCMB) has initiated its much-anticipated rate-cut cycle, lowering the policy rate by 250 basis points from 50% to 47.5%.

The Central Bank of the Republic of Turkey (TCMB) has initiated its much-anticipated rate-cut cycle, lowering the policy rate by 250 basis points from 50% to 47.5%. The bank’s decision reflects a shift to a "meeting-based" monetary policy strategy, as highlighted in its official statement. While cautious in its approach, the move elicited a subdued and slightly negative response from the markets.

Inflation trends in the early months of 2024, with monthly increases of 6.70% in January, 4.53% in February, and 3.16% in March, indicate that base effects are likely to ease annual inflation. This creates favorable conditions for continued monetary easing. The TCMB is expected to cut rates further by 250 basis points in its upcoming meetings on January 23, March 6, and April 17. A significant policy change is the decoupling of the Monetary Policy Committee's meeting schedule from the Federal Reserve’s calendar, signaling a focus on domestic economic priorities.

Economic benefits from these measures are anticipated to emerge in the latter half of 2025, particularly in the credit and housing sectors. With housing poised to benefit from improved credit access, it is forecasted to become one of the most profitable investment avenues in the coming year.

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