Bank of America interest rate and inflation forecast for Turkey: When will the first rate cut begin?

Bank of America (BofA) has shared its report on the Turkish economy.

BofA Turkey economist Zümrüt İmamoğlu stated in the report that September inflation in Turkey came in higher than expected, while core inflation remained stable.

YEAR-END INFLATION FORECAST RAISED

The institution, which raised its year-end inflation forecast from 42.2 percent to 43.3 percent, included the statement: "We are cautiously optimistic that inflation will fall in the final quarter, given the tightness of the monetary policy stance and slowing domestic demand, as seen in some data."

EXPECTATION OF A 200-250 BASIS POINT RATE CUT IN DECEMBER

The report, which stated that the September inflation data did not change their base scenario and that the first interest rate cut is expected in December, included the statement: "We believe the Central Bank of the Republic of Turkey's decision will be data-dependent. If we do not see further upside surprises in inflation, we think there could be a 200-250 basis point rate cut in December. If the data is disappointing, we could see the first rate cut in the first quarter of next year."

2025 YEAR-END POLICY RATE EXPECTATION IS 30 PERCENT

Predicting that if the minimum wage increases at a rate close to the year-end inflation expectation, monthly inflation will temporarily accelerate in the first quarter, and in this case, the CBRT could continue with small-step cuts, the report included the statement: "Our year-end 2025 policy rate expectation is 30 percent."

News Source: 12punto