Morgan Stanley's interest rate and inflation forecast for the Central Bank

Morgan Stanley experts expect the Central Bank of the Republic of Turkey (CBRT) to lower its policy rate to 27 percent by the end of 2026 and to 21 percent by the end of 2027. The team, which includes economists Georgi Deyanov and Andrea Masia, states that the CBRT will make its decisions on a meeting-by-meeting basis and may respond flexibly to changes in financial conditions.

EXPECTATION OF AN INTEREST RATE CUT IN DECEMBER

Morgan Stanley expects the Central Bank to cut the policy rate by 100 basis points in December, bringing it down to 38.50 percent. The report stated, "With the pace of disinflation increasing in the first quarter of 2026, we see room for the Central Bank to increase the pace of interest rate cuts to 150 basis points per meeting. However, we anticipate that this pace will slow back down to 100 basis points by the end of 2026."

INFLATION EXPECTATIONS

According to the economists, inflation will be at 21 percent by the end of 2026 and at 17 percent in 2027. Due to increasing economic growth momentum, the disinflation process is expected to slow down in 2027, but overall, inflation is projected to remain on a downward trend.