Central Bank's interest rate decision to be announced today: What are the expectations?

The Central Bank of the Republic of Türkiye (CBRT) will announce its decision regarding the policy rate today following the Monetary Policy Committee (MPC) meeting. Market expectations are concentrated on the bank making no changes to the interest rate at this meeting and maintaining the policy rate at the 37 percent level.

The CBRT had kept the policy rate steady at 37 percent at its meeting in July. The bank's resumption of weekly repo auctions on August 24, after a break since March 1, was interpreted by some economists as a signal of easing in monetary policy.

However, the current outlook suggests that interest rate cuts may not begin immediately. UK-based Oxford Economics stated in a published assessment that it expects the CBRT to keep the policy rate steady at this meeting. According to the institution, despite the gradual slowdown in inflation, pressures from energy prices and the deterioration in inflation expectations create an early picture for additional interest rate cuts.

COMMON EXPECTATION IN SURVEYS: INTEREST RATE WILL REMAIN STEADY

Economists participating in the AA Finans expectation survey also predict that the Central Bank will leave the policy rate at the 37 percent level. All 19 institutions participating in the BloombergHT survey also do not expect a change in the interest rate in September.

In the Oxford Economics analysis, it was stated that the CBRT's resumption of weekly repo auctions effectively means a 300 basis point easing. For this reason, it is assessed that the bank may postpone a new interest rate cut to the last quarter of the year.

According to the latest data from the Turkish Statistical Institute (TÜİK), annual inflation fell to 31.51 percent in August. However, the increase in energy costs and price adjustments related to education are shown among the factors limiting the slowdown in inflation.

Oxford Economics predicts that the gradual decline in inflation may continue for the remainder of the year and that the CBRT could implement 100 basis point interest rate cuts in both October and December. In this scenario, the policy rate is expected to fall to 35 percent by the end of the year.

In the Medium-Term Program (OVP), which covers the 2027-2029 period, inflation targets were revised upwards compared to the previous program. The program included a year-end 2026 inflation forecast of 28.4 percent. This rate is also above the 28 percent forecast in the inflation report announced by the CBRT on August 13.

News Source: 12punto