Foreign institutions announce their expectations: Is an interest rate cut coming?

Following the Central Bank of the Republic of Turkey's (TCMB) decision to keep the policy rate steady at 50 percent, several institutions, including Goldman Sachs and JPMorgan, shared their expectations in published reports.

Stating that the TCMB kept the interest rate unchanged at 50 percent in line with expectations, Goldman Sachs analysts assessed, "We expect inflation expectations to fall rapidly as the slowdown in economic activity deepens in the third quarter of the year. We project headline inflation to decline to 36 percent by the end of the year. We maintain our expectation that the first interest rate cut will take place at the end of the third quarter."

"EARLY INTEREST RATE CUT MAY BE SEEN"

In its assessment, Barclays noted that the TCMB maintained its hawkish tone in its statement, drawing attention to the possibility of an early cut with the following remarks:

"The TCMB kept the policy rate at 50 percent as expected. We expect interest rates to remain at this level until January 2025, but if the disinflation process is stronger than we expect, we could see an early cut in the last quarter of 2024."

MORGAN STANLEY POINTS TO 2025

Pointing to 2025 for an interest rate cut, Morgan Stanley assessed, "The bank's decision to keep rates unchanged and its hawkish communication support our expectation of a tight monetary policy stance for a long time. We expect the policy rate to remain at this level until the end of the year and for interest rate cuts to begin in the first quarter of 2025."

JPMorgan commented, "While the TCMB left the interest rate at 50 percent as expected, it maintained its hawkish rhetoric that it is ready to tighten if there are upside risks to inflation. We maintain our policy rate expectation of 45 percent for the end of 2024. We expect interest rate cuts from the TCMB in November and December."

News Source: 12punto