Foreigners' 'interest rate' expectations from the Central Bank
The Central Bank of the Republic of Turkey (TCMB) will announce its interest rate decision at the Monetary Policy Committee (PPK) meeting it will hold tomorrow. Foreign experts have predicted the Central Bank's interest rate decision.
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Foreign experts predict that the Central Bank of the Republic of Turkey's (TCMB) Monetary Policy Committee (PPK) will keep the policy rate unchanged at its meeting, while stating that the lira's appeal may increase in the coming months due to the bank's policies and the projected improvement in the current account.
"POSITIVE EFFECT"
Natixis Central and Eastern Europe, Middle East, and Africa Economist Inna Mufteeva said, "Considering the positive effect of the unexpected interest rate hike in March on the lira, which reinforced the credibility and independence of the current TCMB Governor, the TCMB may want to see how this decision reflects on the Turkish economy from now on."
Stating that the lira has stabilized for a while, or at least that the pace of depreciation has slowed, Mufteeva expressed that the positive trend in foreign exchange is therefore expected to alleviate some of the pressures stemming from domestic prices in the coming months.
Mufteeva noted that since the inflation data for April will be announced on May 3, it might be logical to wait for this positive trend in price dynamics to be confirmed.
On the other hand, stating that communication and forward guidance could be clearly hawkish, Mufteeva predicted that, considering these factors, the current situation will continue and interest rates will be kept unchanged.
REMINDED OF GOVERNOR KARAHAN'S WORDS
Societe Generale Central and Eastern Europe, Middle East, and Africa Strategist Marek Drimal predicted that the TCMB would keep the policy rate unchanged at 50 percent.
Recalling the statements made by TCMB Governor Fatih Karahan in Washington, "Our top priority is fighting inflation and accumulating reserves as much as possible depending on market conditions," Drimal noted that the lira's appeal could increase in the second quarter of the year.
Emphasizing that the lira could be supported by the seasonal improvement in the current account following the acceleration of the tourism season and the effect of the TCMB's monetary tightening, Drimal assessed, "We expect the lira to strengthen in the second and third quarters."
Economists participating in the AA Finance expectation survey expect the TCMB to keep the policy rate unchanged at 50 percent.
The median of the economists' year-end policy rate expectations was 45 percent.