Deposit interest rates continue to decline: 15 points in 1.5 months

The downward momentum in deposit interest rates continued in the week of August 4. Interest rates on 1-3 month term deposits, which are predominant deposits, fell by 15 points in 1.5 months. While there was a record increase in exchange rate protected deposits, it was observed that the downward momentum in deposit interest rates continued. According to the Central Bank of the Republic of Turkey (CBRT) data, the average interest rate on 1-3 month term deposits, which are predominant deposits, fell below 28 percent as of the week of August 4. Thus, a decrease of up to 15 points was recorded in deposit interest rates in 1.5 months. Deposit interest rates had risen to a 23-year record level of 42 percent in June. The downward trend in deposit interest rates had accelerated under the influence of the new economic administration’s macroprudential measures. CBRT Governor Hafize Gaye Erkan had drawn attention to this issue in her first public presentation of the inflation report. Erkan had said, "Before our first MPC decision in June, the policy rate was 8.5 percent, while the deposit rate had exceeded 40 percent on average. As part of the June MPC decision, in addition to the interest rate hike, we put into effect the first step of the simplification process within the macroprudential framework with the application of securities facility in deposits."