INTEREST RATE CUT EXPECTED
When Treasury and Finance Minister Mehmet Şimşek took office following the 2023 General Elections, the policy interest rate stood at 8.5%, while inflation was at 38%. With the appointment of Hafize Gaye Erkan as the Central Bank Governor, the new economic management team implemented its first interest rate hike in June 2023, raising the policy rate to 15% as part of the “return to rational policies”. This tightening continued in the following months, culminating in a 500 basis point increase before the local elections, bringing the interest rate to 50%. However, in the last two Monetary Policy Committee (PPK) meetings, the Central Bank decided to cut rates.
At today’s PPK meeting, a 250 basis point interest rate cut is expected, influenced by inflation figures that came in below expectations. However, the damage caused by the prolonged high-interest policy will continue to affect citizens in the long run.
Note: This article is translated from the original Turkish version titled Bankalar krizi fırsata çevirdi published in BirGün newspaper on March 6, 2025.
