Interest rate forecast for the Central Bank from Morgan Stanley

The Central Bank of the Republic of Turkey (CBRT) Monetary Policy Committee will meet on Thursday, November 23, under the chairmanship of Hafize Gaye Erkan. The new interest rate decision to be taken at the meeting is eagerly awaited.

While investors are focused on the interest rate decision to be announced by the Central Bank of the Republic of Turkey (CBRT) Monetary Policy Committee (MPC) this week, forecasts regarding the interest rate decision have also begun to arrive from international financial institutions.

Morgan Stanley has joined the institutions that predict the Central Bank will continue tightening at a slower pace.

In a note prepared by Morgan Stanley CEEMEA Economist Hande Küçük, it was estimated that the policy rate would be increased by 250 basis points at the upcoming meeting.

Stating that the latest statement from the CBRT Monetary Policy Committee and the remarks made by CBRT Governor Hafize Gaye Erkan during the Inflation Report presentation signaled additional tightening steps regarding inflation, Morgan Stanley also underlined that no specific forward guidance was provided.

Although there was no guidance in the note suggesting that the CBRT might shift to a slower pace in its tightening cycle, the bank projected that the pace would slow down.

Morgan Stanley stated that it expects a smaller increase of 250 basis points at the next meeting, as the monetary stance has largely normalized and the impact of the tightening carried out so far will become more visible in the coming months.

The note included the assessment: "Given the policy preference for a moderate adjustment in growth and the lags in monetary transmission, it is likely that the CBRT will reduce the pace of increases and evaluate the impact of cumulative tightening steps on economic activity and inflation."

News Source: 12punto