Central Bank’s rate-setting meeting to convene this week

ANKARA

The Central Bank’s Monetary Policy Committee will meet on March 6 to decide on the policy rate.

Most economists expect the bank to deliver another 250bps cut to slash the one-week repo auction rate to 42.5 percent.

The bank started the easing cycle in December last year and lowered its key interest rate by 2.5 percentage points to 45 percent in January in its second cut in as many months as inflation started to slow.

Türkiye's annual inflation rate dropped to a 19-month low of 42.12 percent in January, with consumer prices rising 5.03 percent from the previous month, according to the latest official data.

Economists forecast that the policy rate will come down to 30 percent at the end of 2024, showed a survey by state-run Anadolu Agency.

The central bank has scheduled eight monetary policy meetings for this year, down from 12 last year. The next rate-setting meeting will take place on April 17.

In February, the bank lifted its annual consumer inflation forecast for 2025 from the previous 21 percent to 24 percent, while keeping its forecast for 2026 unchanged at 12 percent.

A recent survey conducted by the central bank showed that consumers’ inflation expectations households’ expectations rose for the first time in six months in February, while the real sector’s expectations continued to decline.

12-month-ahead annual inflation expectations increased by 0.4 points to 59.2 percent for households and decreased by 1.9 points to 41.9 percent for the real sector.

The proportion of households expecting a fall in inflation in the next 12 months decreased by 2.5 points to 28.3 percent, said the bank.

Households’ inflation expectations constantly declined from September 2024 and January 2025.

Commenting on the bank’s survey, Finance Minister Mehmet Şimşek noted that household expectation is more heavily influenced by past inflation.

“While the market expectation aligns with our inflation target, we foresee that the high real sector and household expectations will improve rapidly with the continued decline in inflation,” Şimşek said.

The bank’s rate-setting meeting will be held as the latest GDP data showed that Türkiye shared the top spot with Spain in the fastest-growing economies last year among countries in the Organization for Economic Cooperation and Development (OECD).

Türkiye and Spain’s growth rate reached 3.2 percent in 2024, followed by the U.S. with 2.8 percent, Lithuania with 2.7 percent, and Norway with 2.1 percent.