CBRT's Interest Rate Decisions and April Expectations:

The Central Bank of the Republic of Turkey (CBRT) reduced the policy interest rate, the one-week repo auction rate, by 250 basis points to 42.5% in its Monetary Policy Committee (MPC) meeting on March 6, 2025. This decision marks the third rate cut in the past three months. The decline in inflation, which fell to 39.05% according to the February inflation data, is one of the main reasons for the rate cut. Following the decision, a positive atmosphere prevailed in the markets, and the CBRT's action within the framework of fighting inflation is being closely monitored by investors and economic circles.

The CBRT's March decision indicates that the tight monetary policy stance is being slightly eased in line with inflation targeting. While inflation is on a downward trend, and the weakening domestic demand is affecting the economy, rate cuts continue. However, the CBRT emphasizes that the tight monetary policy stance will continue in the later periods of the year to achieve inflation targets. Steps to reduce inflation to the targeted level of 21% will be one of the main factors influencing future rate decisions.

April 2025 Expectations:

Markets are focused on the next MPC meeting scheduled for April 17, 2025. According to current market expectations, the CBRT is expected to keep the policy rate at 42.5%. Based on surveys conducted by market participants, it is anticipated that the interest rate will not change in April. However, expectations for interest rates may decrease slightly for the second quarter and beyond. The expectation for the rate three months ahead is 39.24%. This reflects the market's belief that inflation will continue to fall by the end of the year, and the CBRT may continue with further rate cuts.

In an environment where the interest rate is expected to remain unchanged in April, the CBRT's monetary policy stance and inflation-related statements will be crucial. If the downward trend in inflation continues, further rate cuts may be on the agenda in the coming months. Particularly, improvements in inflation rates in the second half of 2024 will support the case for rate cuts.

CBRT Governor Fatih Karahan's Statements:

CBRT Governor Fatih Karahan recently stated that the disinflation process would begin in June 2024 and that the target for the end of the year is to bring inflation down to 21%. Accordingly, starting from the second half of the year, the inflation target will become more clearly trackable, and interest rate policies will be shaped accordingly. Karahan emphasized that the CBRT would be cautious in the process of reducing interest rates and that conditions must be met for further rate cuts.

Inflation and Interest Rate Decisions:

In the coming period, the CBRT's interest rate decisions will largely depend on inflation data and economic indicators. If inflation continues to decrease and the economy stabilizes, further interest rate cuts are expected. However, if inflationary pressures rise again, the CBRT may strengthen its tight monetary policy stance and raise interest rates.

In conclusion, CBRT's interest rate decisions will be shaped by inflation targeting, domestic demand, and global economic developments. Although there might not be any rate cuts or hikes in the meeting on April 17, it could provide important signals for the markets. In particular, this meeting, where the CBRT will clarify its stance on tight monetary policy and steps to combat inflation, may signal potential future rate changes in the second half of the year.