Duvar English
The Turkish Central Bank announced that the Monetary Policy Committee (MPC) meetings, where the policy interest rate is determined, would be held eight times in 2025.
On Dec. 25, the Bank published its “2025 Monetary Policy” framework. The statement highlighted that the inflation target remains at 5 percent, noting, “The monetary policy will be conducted in a way to ensure the monetary and financial conditions to bring inflation to this target in the medium-term.”
The Central Bank also stated that the MPC will convene eight times in 2025 according to a pre-announced schedule rather than its monthly meetings. However, no explanation was provided for the shift to this new arrangement.
The Central Bank stated that it “initiated a strong monetary tightening process in order to establish the disinflation course as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behavior.”
The bank reminded that its current administration raised the policy rate from 8.5% in June 2023 to 50% in March 2024. Since then, there has not been any change in the interest rate.
The bank to complete phasing out FX-protected deposits
The Central Bank also announced that it aims to finish rolling back on the contraversial scheme that protects lira deposits from FX depreciation, also known as KKM.
In its latest statement, the the bank noted, “The share of Turkish lira deposits within total deposits rose to 58.6%, while the share of KKM accounts fell to 6.2% as of Dec. 20, 2024.” This shift reflects the growing demand for Turkish lira assets, bolstered by measures enhancing the monetary transmission mechanism.
The KKM balance dropped to $34.2 billion by the same date, marking a substantial decrease as the Central Bank prepares to simplify its macroprudential framework. The Bank confirmed its intention to terminate the KKM scheme during 2025.
“As the disinflation process becomes more evident in 2025, demand for Turkish lira assets will continue,” the Bank stated.
