Turkish Lira deposit rates hit lowest level since 2023

ISTANBUL

(AA Photo)

The average interest rate on Turkish Lira deposits with maturities of one to three months fell to 37.3 percent as of Sept. 4, its lowest level since 2023, Central Bank data showed.

Personal loan rates rose to 49.8 percent after recently falling to 48.3 percent, while commercial loan rates increased to 40.8 percent from a recent low of 39.3 percent.

Deposit rates had already fallen below 40 percent in late July, before the Central Bank’s Aug. 23 decision to resume one-week repo auctions.

The auctions, suspended since March 1, allow banks to borrow at the 37 percent policy rate rather than the 40 percent overnight lending rate. The change lowered banks’ funding costs without a formal policy rate cut.

Analysts had warned that lending rules would limit the impact of cheaper funding on loan rates.

The Central Bank held its policy rate at 37 percent on Sept. 10. Morgan Stanley and JPMorgan have forecast cuts of 100 basis points at each of the year’s two remaining policy meetings, in October and December, taking the rate to 35 percent by year-end.

Bank of America expects a single 100-basis-point cut in October, leaving the rate at 36 percent at the end of the year.

Investors are also awaiting the U.S. Federal Reserve’s Sept. 15–16 meeting, with markets anticipating a 25-basis-point increase.

Fed Chair Kevin Warsh signaled at Jackson Hole on Aug. 28 that further policy action could be needed if inflation failed to move toward the Fed’s target at a sufficient pace.