Central Bank Cuts Interest Rates: Are Deposit and Loan Rates Decreasing?

Has the 5-point interest rate cut by the Central Bank of the Republic of Turkey (CBRT) in the last meetings of 2024 and early 2025 had an impact on deposit and loan rates? While long-term deposit rates saw a reduction of 10 percentage points, there was a limited decrease in the interest rates for personal and commercial loans. What is the current situation regarding deposit and loan rates?

The Central Bank of Turkey (CBRT) started its rate-cutting cycle after observing a decrease in inflation and with the Federal Reserve (Fed) of the United States starting its own rate cuts in September. In the CBRT’s final meeting of 2024, held on December 26, the first interest rate cut was made with a reduction of 250 basis points. This marked the beginning of the CBRT’s interest rate cut process after 22 months. The fact that there would be 8 meetings in 2025 also drew attention. The CBRT continued with another rate cut on January 23, 2025, reducing the policy rate by another 250 basis points to 45%.

Deposit Rates:

The rate cuts implemented by the Central Bank in December affected deposit rates.

• For short-term deposits, the average interest rates for 1-month and 3-month deposits were 55.04% and 59.44%, respectively, on December 20. After the second interest rate cut, by January 17, these had decreased to 52.72% and 54.98%.
• For deposits with maturities of up to 6 months, the effect of the interest rate cut was more pronounced. On December 20, the interest rate for 6-month TL deposits was 53.89%, while by January 17, this dropped to 43.64%.
• For deposits with 1-year and longer maturities, the interest rates also decreased. On December 20, they were 50% and 40.73%, respectively, and by January 17, they had fallen to 44.34% and 31.88%.

Loan Rates:

While business owners and economists were expecting interest rate cuts to reflect on loan rates as well, the reduction has been limited.

• Car Loans: Interest rates on car loans saw volatility. In the week of December 20, the interest rate for car loans was 36.13%, which increased to 49.55% in the first week of 2025. However, it dropped slightly to 47.30% by the week of January 17.
• Housing Loans: Housing loan interest rates have been on a steady downward trend for a while. The peak was seen in the first week of April 2024, when the rate was 45.14%. By January 17, 2025, housing loan interest rates had decreased to 40.41%. Experts expect this decline to continue.
• Personal Loans: The drop in interest rates for personal loans (including overdraft loans) has been limited. After an initial increase in the first week of the year, personal loan interest rates decreased again and reached 68.30% by January 17, while including overdrafts, the rate was 72.64%.
• Commercial Loans: A notable decrease was observed in commercial loan rates. In the week of December 20, the interest rate for commercial loans was 60.27%, and by January 17, it had fallen to 59.09%.
  
  source: ekonomim.com