Following the interest rate cut by the Central Bank, banks have taken action. Downward updates in deposit interest rates have begun. A rapid decrease in deposit yields has been noticeable in recent times. Here is the yield of 1 million lira in a 32-day term…After the interest rate cut by the Central Bank, banks have rapidly started updating deposit interest rates. The Central Bank of the Republic of Turkey (CBRT), last week, reduced the policy rate by 250 basis points in line with expectations, lowering it from 45% to 42.5%. Banks, moving quickly to adjust deposit interest rates, have been more conservative in adjusting loan interest rates. Last week, the highest interest rate on short-term deposit offers from banks was around 47%. In the new week, this rate has dropped to 44%. Some banks, however, continue to apply interest rates of 47-48% only to new customers.Meanwhile, another factor contributing to the reduction in deposit yields has been the increase in withholding tax. As of February, the withholding tax rate on deposit interest rates has increased from 10% to 15%. Withholding tax on time deposits is calculated based on the earned income, not the total amount deposited. Therefore, the increase in withholding tax leads to a decrease in income obtained from interest. The Central Bank initiated an interest rate reduction cycle starting in December 2024. The policy rate has decreased from 50% to 42.5% over 3 meetings. Additionally, the withholding tax rate has increased from 10% to 15. The combined effect of these two factors has led to a significant decrease in deposit yields. In December, the 32-day yield on 1 million lira was around 43,400 lira. Without switching to a new bank, the highest interest rate today has been calculated as 33,161 lira. Therefore, there has been an approximate decrease of 10,000 lira in yields over a 3-month period.Deposit amount: 1 million liraDeposit rate: 48%Deposit term: 32 days Net yield: 35,770 liraDeposit amount: 1 million liraDeposit rate: 44.5%Deposit term: 32 days Net yield: 33,161 lira