State lenders follow suit after Central Bank cuts interest rates

ISTANBUL

Turkish state-owned lenders Ziraat, Vakıfbank and Halkbank have lowered loan interest rates between 50 and100 basis points on Nov. 19.

After the Central Bank cut its benchmark rate from 16 percent to 15 percent on Nov. 18, the three banks decided to follow suit.

House loans for new properties priced below 1 million Turkish Liras (nearly $91,000) decreased from 1.29 percent to 1.20 percent, while house loans for more expensive properties dropped from 1.34 percent to 1.29 percent.

Interest rates for corporate loans were cut 100 basis points in accordance with maturity period and other conditions.

In a joint statement on Oct. 25, the three banks announced a drop in interest rates of corporate loans by 200 basis points, following the Central Bank’s decision to cut its benchmark rate - one-week repo rate - from 18 percent to 16 percent.

After its latest Monetary Policy Committee meeting on Nov. 18, the Central Bank said that “developments in consumer loans are closely monitored.”

“The committee evaluated the analyses to decompose the impact of demand factors that monetary policy can have an effect, core inflation developments and supply shocks and decided to reduce the policy rate by 100 basis points to 15 percent.”

In October, Turkey saw an annual increase of 19.89 percent in consumer prices, and the Central Bank raised its year-end inflation forecast to 18.4 percent for 2021, up from 14.1 percent in its previous report.

Speaking to his party’s parliamentary group on Nov. 17, President Recep Tayyip Erdoğan reiterated his longstanding opposition to higher interest rates.

“I will continue my fight against interest rates and inflation until the end. My friends who defend the interest rates should not be offended but I cannot walk with those who defend interest rates,” he said.