Strong Statement from the White House: “I Cannot Let a Terrorist Smuggle into the U.S.”
With this decision, the monetary tightening process that has been in place for some time continues, and the policy interest rate has been raised to 46%. This increase, following the previous rate of 42.5%, is in line with general market expectations and reaffirms the Central Bank’s insistence on fighting inflation. Why Was This Decision Made? Official statements indicated that domestic consumption remains vibrant, the upward trend in the general price level has not yet been brought under control, and the cost structure, particularly in the services sector, is still creating pressure. Therefore, the aim of the interest rate increase is to reduce demand-side pressure and accelerate the transition to price stability.
Technical Details: What Happened to Which Interest Rate?
Following the interest rate decision, not only the policy interest rate but also the short-term reference interest rates were updated:
- Overnight lending rate: 49%
- Overnight borrowing rate: 44.5%
This step was taken to balance the banking system’s impact on the money supply and to tighten liquidity.
How Did the Markets React to the Decision?
Initial market reactions after the announcement of the decision were quite limited. Although the USD/TRY exchange rate moved upwards momentarily, the overall outlook remained stable. The Istanbul Stock Exchange, however, showed a sideways trend. Experts emphasize that the Central Bank’s decisions, in line with expectations, are positive for market confidence. Long-Term Message: No Stepping Back The Central Bank’s statement, “The tight stance will be maintained as long as necessary,” indicates that the direction of monetary policy will not change in the near future. The Central Bank’s statement clearly signals to investors that there will be no compromise on inflation targeting.
Next Stop on the Calendar: June 2025
As we enter the period where the effects of the new interest rate hike will be seen, eyes are turned to the next Monetary Policy Committee meeting to be held on June 19, 2025. The Turkish Statistical Institute (TÜİK) inflation data, exchange rates, and domestic consumption figures to be released until this date will be decisive in the Central Bank’s next steps.
