The Monetary Policy Committee of the Central Bank of Turkey, (CBT), met on Thursday to determine what should happen to interest rates.  They decided to make a few changes this month.

Here, we give our view on what is happening.  It's good news for now, but next year, it looks like we may have to get used to lower rates on our savings.

There is no single interest rate operating in the financial markets.  There are several.  At Kalkan Turkish Local News, in our reports we have always focussed on the overnight lending rate, as this has, historically, tended to reflect the interest rate you can expect to receive on your savings.

This month, the CBT decided to increase this rate from 8.75% to 9.00%.  Good news for savers in the short term.  Local bank managers have confirmed that you can expect to get rates close to this, on significant sums invested.  The rate is less for smaller investments.

However, looking at the text of this announcement by the CBT in full, we see it as a clear indication that high street banks in Turkey are going to be offering reduced rates to savers in the new year.  That's not good news, if interest from your Turkish savings represents your principal income stream.

Interest rate policy in Turkey is somewhat complicated, and there is a bit more to it than the simplified reporting we provide on KTLN.

If you want to know more, you can read the CBT press release, by clicking on the following link: Central Bank of Turkey

To read what Turkish online press have to say on this, click on the following link: Hurriyet Daily News article

If you want a more in depth analysis, try this: Bloomberg article or this economic overview from Citi Group.