Foreign institutions divided ahead of CBRT interest rate decision

Markets are holding their breath ahead of the CBRT's June 2026 Monetary Policy Committee (MPC) meeting. Whether the policy rate will be kept steady at 37 percent or if a new step will be taken is a matter of curiosity. The forecasts of foreign banks and analysis firms have diverged remarkably.

THOSE PREDICTING STEADY RATES ARE IN THE MAJORITY

A significant portion of international financial institutions anticipates that the CBRT will not change the policy rate at tomorrow's meeting. Morgan Stanley, Standard Chartered, HSBC, Citi, Deutsche Bank, ING Global, Goldman Sachs, and Bank of America (BofA) are united in the view that the current rate will be maintained.

In an analysis published by Morgan Stanley, it was noted that a possible interest rate cut could occur in the final quarter of the year, while BofA stated that while keeping the policy rate unchanged is the main scenario, it also drew attention to the possibility of a 300 basis point interest rate hike.

ARGUMENTS OF THOSE CALLING FOR ADDITIONAL TIGHTENING

Although market expectations are generally shaped in favor of steady rates, some institutions expect an increase due to the rising inflation outlook and geopolitical risks. JPMorgan, Capital Economics, and BBVA have predicted that the CBRT will go for additional tightening in line with its price stability target and raise the policy rate to 40 percent.

It is stated that the impact of rising oil prices on global inflation and the inflation momentum over the last two months have been influential in these institutions' forecasts of a tightening step.

A "WAIT-AND-SEE" ATTITUDE PREVAILED IN PREVIOUS MEETINGS

The Central Bank, which lowered the policy rate by 100 basis points to 37 percent at the beginning of 2026, did not make any changes in the following March and April meetings. In May, no MPC meeting was held, allowing for more data and developments to be monitored. Inflation, which has shown an upward trend especially in recent months, and fluctuations in international markets stand out as the main factors influencing the decision-making process.

NEW DECISION TO BE ANNOUNCED TOMORROW AT 14.00

The expressions to be used in the decision text will also be closely watched by the markets. Messages regarding CBRT policy and the inflation outlook will carry important clues for financial circles. The signals the Central Bank will give regarding the course of monetary policy in its policy text will be closely followed by investors and economic circles.

News Source: 12punto