Foreign economists share their forecasts before CBRT interest rate announcement

Societe Generale Central and Eastern Europe, Middle East, and Africa Strategist Marek Drimal stated in his assessment that despite the recent upside surprise in inflation, he expects the CBRT to keep the policy rate unchanged at 45 percent at the Monetary Policy Committee (MPC) meeting.

Stating that the CBRT may try to avoid direct tightening through interest rate hikes, Drimal expressed that the reasons for the bank's wait-and-see policy in its communication could be the recently implemented macroprudential tightening measures and the expected improvement in the balance of payments.

However, Drimal noted that the probabilities are shifting toward another interest rate hike of 250 or 500 basis points. Stating that for now, the CBRT could keep the policy rate unchanged at 45 percent for the remainder of 2024, Drimal emphasized that a 500 basis point cut could come in the first quarter of 2025.

Drimal assessed, "We see that the short-term outlook for the Turkish Lira is negative, but the improvement in the current account and expected foreign currency inflows are still likely. These could lead to the strengthening of the Lira in the 2nd and 3rd quarters."

MAY KEEP IT STABLE

In Touch Capital Markets Senior FX Analyst Piotr Matys also said that the CBRT is expected to keep the policy rate unchanged at 45 percent.

However, noting that the CBRT might need to seriously consider further tightening its monetary policy if there is an increase in inflation in the coming months, Matys said, "Investors will be looking for new clues on this matter in the official statement that the CBRT will release when the decision is announced."

Economists participating in the AA Finans expectation survey expect the CBRT to keep the policy rate unchanged. The median of the economists' year-end policy rate expectations was 45 percent.

News Source: 12punto