JPMorgan sets a date for the Central Bank's interest rate cut!

JPMorgan analysts assessed that the slowdown in the inflation outlook in Turkey and the improvement in the current account balance have created room for the Central Bank of the Republic of Turkey (CBRT) to begin interest rate cuts starting in September.

In the bank's daily investor note, it was stated that July inflation remaining below expectations and the loss of momentum in inflation have strengthened the possibility of a gradual easing in monetary policy. The assessment expressed that this process could proceed without requiring a fundamental change in exchange rate policy.

While reporting that it maintains its long position in the Turkish Lira, JPMorgan noted that it expects authorities to continue the real appreciation of the lira as part of the disinflation program.

RISKS CONCENTRATING IN POSITIONING

The bank emphasized that despite the positive outlook, market positioning is a significant risk factor. It is estimated that foreign-sourced carry trade positions have exceeded pre-Iran conflict levels, reaching approximately 47 billion dollars.

The note warned that this scale could narrow the room for maneuver in markets against negative surprises that might arise from domestic politics, inflation, or energy prices. It was also reported that the financial measures expected following US Treasury Secretary Scott Bessent's statement regarding Iran are being closely monitored by the market.

According to JPMorgan, the current trend of depreciation in the Turkish Lira may continue in the short term. The bank stated that the real test could occur when interest rate cuts begin and the seasonal support in the current account reverses around November.

The assessment further stated that the fact that households have not shown a significant shift from lira deposits to foreign currency could allow for gradual easing, but that the CBRT might need to maintain a tight stance to the extent that it preserves the attractiveness of lira deposits.