US banking giant evaluates Central Bank's interest rate decision
Evaluating the Central Bank of the Republic of Turkey's (CBRT) 500 basis point rate hike, Goldman Sachs stated that the increase was a one-off adjustment in response to rising inflation and the depreciation of the Turkish lira, and not the beginning of an interest rate hiking cycle.
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The Central Bank of the Republic of Turkey (CBRT) Monetary Policy Committee (MPC) announced the interest rate decision that markets had been eagerly awaiting yesterday.
The CBRT raised its policy rate by 500 basis points to 50 percent.
Goldman Sachs, one of the most prominent US investment banks, noted that the 500 basis point rate hike implemented by the CBRT was a one-off step aimed at addressing inflation and currency depreciation expectations, and not the start of an interest rate hiking cycle.
According to the report in Ekonomim; Goldman Sachs also stated that the decision would increase the Central Bank's credibility regarding price stability and the transition to orthodox monetary policy.
YEAR-END INFLATION EXPECTATION IS 32.5 PERCENT
The assessment stated, "We continue to expect annual inflation to fall sharply in the second half of the year, declining to 33 percent by year-end, and for the CBRT to begin easing monetary policy from the third quarter, reaching 32.5 percent by the end of 2024."
The CBRT Monetary Policy Committee (MPC) had raised the one-week repo auction rate, which is the policy rate, by 500 basis points to 50 percent.