Term deposit interest has decreased since the second half of 2019 and reached its lowest level in 3 years with 9.60 percent last week.
Last year, a successful balancing process in the economy was left behind. As of the end of the year, the 12 percent inflation target in the New Economic Program (NEP) was achieved, and the policy interest rate was one step closer to single digits.
The Central Bank of the Republic of Turkey (CBRT) has reduced the policy rate from 24 percent to 11.25 percent with a 1275 basis point reduction since July 2019.
The average interest rate on time deposits, which approached 23 percent in June last year, gradually decreased and reached below 10 percent in the new year. On January 17, the average interest rate on term deposits reached its lowest level in 3 years with 9.60 percent.
Term deposit interest up to 1 month is increased to 9.21 percent, up to 3 months term deposit interest is increased to 10.33 percent, up to 6 months term deposit interest is increased to 9.25 percent, up to 1 year term deposit interest is 9.54 percent. e, the interest rate on time deposits of 1 year or more decreased to 9.65 percent.
Analysts stated that if the decline in inflation and policy interest rates continues in the coming months, the decline in deposit interest rates will continue.
“The fruits of the discipline and balancing process were seen”
AA Analyst Cüneyt Paksoy, in his assessment on the subject, said that the fruits of the discipline and balancing process that started in September 2018 in the Turkish economy and continued throughout 2019 were seen.
Paksoy stated that these fruits were seen in the banking system, in deposit interest rates that decreased in parallel with the CBRT interest rate cuts and in loan interest rates that decreased as a natural result of this equation, and continued as follows:
“We see that the positive pricing of the 1275 basis point reduction carried out by the CBRT so far on the exchange rate and interest side gives the Central Bank new room for maneuver for the upcoming period, while it also gives the banking system a serious potential on the cost side, with deposit interest rates falling to single digits.”
“Continuation of the positive process is possible”
Paksoy said that it is possible to continue this positive process in 2020 as long as the inflation anchor allows and the CBRT continues its interest rate cuts in a gradual and balanced manner depending on the price and financial stability anchors.
Paksoy predicted that unless there is an unexpected negative news flow on a global scale, internal dynamics or geopolitical risks and an extreme change in direction that will affect the balanced positive trend on the exchange rate, interest or CDS side, the banking system will be on the side that will support Turkey’s change process and production, and made the following evaluations:
“We see that this story is supported in the latest positive reports from important institutions abroad regarding the banking sector. In parallel with all these, we see that deposit interest rates have decreased to single digits. We expect that pricing within the 7-10 percent band will potentially be on the table during the year.”
Source: https://www.aa.com.tr/tr/ekonomi/mevduat-faizleri-3-yilin-en-dusugune-geriledi/1714313
