US bank announces year-end inflation forecast for Turkey

Leading US-based investment bank Morgan Stanley has announced its expectations regarding the interest rate decision to be released tomorrow by the Central Bank of the Republic of Turkey (TCMB).

In a report authored by Morgan Stanley economist Hande Küçük, it is estimated that the TCMB will keep the policy rate steady at 50 percent at tomorrow's meeting.

On the other hand, it was stated that the TCMB is expected to continue monitoring the delayed effects of monetary policy on domestic demand and inflation, and to keep the door open for a potential interest rate hike.

The following statements were included on the matter:

We expect the Monetary Policy Committee to keep the door open for further interest rate hikes against risks to the disinflation path.

"WE EXPECT ADDITIONAL LIQUIDITY MEASURES"

It was projected that the TCMB would maintain the interest rate at this level until November, and reduce it to 45 percent by the end of the year with two interest rate cuts.

Stating that they also expect additional liquidity measures from the TCMB, Küçük noted, "We expect additional liquidity measures, such as an increase in reserve requirement ratios, to be taken to support the transmission of the policy rate to interbank rates and broader financial conditions."

WHAT IS LIQUIDITY?

Liquidity is the term given to the ease with which a financial product can be converted into cash. Real estate such as a person's house or car, or bonds and similar securities belonging to any company, are examples of liquid assets.