Divergent forecasts from British banks on CBRT interest rate cuts

While economists have stated that they do not expect an interest rate cut from the Central Bank of the Republic of Turkey (CBRT) in 2024 in light of recent data, two major British banks have announced conflicting expectations just one day apart.

Following the CBRT's August interest rate meeting, foreign institutions had reached the conclusion that monetary easing would be difficult to achieve this year.

HSBC, based in the UK, reiterated its forecast in a report published yesterday that the CBRT would not make any interest rate cuts in 2024.

According to BloombergHT, Barclays economists reported that they now expect the CBRT to begin interest rate cuts in November 2024, whereas they had previously expected these cuts to occur in 2025.

Policy rate projected to be 25 percent by August 2025

The economists who authored the "Emerging Markets Quarterly Report," including Ercan Ergüzel, stated that they expect the first interest rate cut in November, while also outlining their forward-looking projections.

While a 250 basis point cut is expected in November 2024, it was noted that following the initial rate cut, the CBRT is expected to continue with 250 basis point cuts at each Monetary Policy Committee (PPK) meeting. The policy rate is projected to be 25 percent in August 2025.

Economists also projected that the real policy rate would remain above realized inflation in September 2025, with inflation expected to fall below 25 percent by September 2025.