Deutsche Bank interest rate forecast for Turkey

Deutsche Bank economists Yiğit Onay and Christian Wietoska stated that they have updated their outlook on monetary policy, taking into account rising geopolitical risks and their potential impact on Turkey's inflation and balance of payments dynamics, and that they now expect 250-basis-point interest rate hikes from the CBRT in both November and December.

According to the note published today, the economists expect a 500-basis-point interest rate hike from the CBRT at next week's Monetary Policy Committee meeting.

As reported by Bloomberg, the economists maintain their view that the interest rate hikes will conclude once the one-week repo rate reaches 40 percent, but they now believe this level will be reached sooner than their previous forecast, by the end of the year.

The institution had previously projected that the final policy rate level of 40 percent would be reached in the second quarter of 2024, following the local elections.

The note stated that such a policy “would be more consistent with the goals of bringing inflation expectations under control, putting the economy on a sustainable path, and strengthening the Central Bank's credibility.”

News Source: 12punto