Will the Central Bank cut interest rates? Economists announce their expectations

The Central Bank of the Republic of Turkey (CBRT) Monetary Policy Committee (MPC) will announce its interest rate decision on Thursday, June 27.

The MPC had kept the one-week repo auction rate, which is the policy rate, unchanged at 50 percent. All eyes in the market are now on the new interest rate decision to be announced by the Central Bank on June 27.

EXPECTED TO REMAIN STEADY AT 50 PERCENT

The Central Bank (CBRT) is expected to keep the policy rate steady at 50 percent in June, following the tightening it last implemented in March to bring inflation, which has been running above expectations, under control.

REUTERS SURVEY

All 11 economists participating in the Reuters survey predicted that the policy rate would be kept steady this month.

Following the general elections held last year, as a result of the president-backed tightening since June, the CBRT has raised the policy rate by 4,150 basis points, with the last hike occurring in March.

The CBRT stated that with the policy rate at the 50 percent level, its tight monetary policy stance will continue until a permanent decline in inflation is achieved.

While inflation rose to 75.45 percent in May, the highest level since the end of 2022, the CBRT expects inflation to fall to 38 percent by the end of the year, with a decline in annual inflation starting as of June.

CBRT Governor Fatih Karahan stated in his speech last week that headline inflation will decline every month for the remainder of the year, and added that they are closely monitoring the convergence of inflation realizations and expectations with the forecast path.

Karahan also said that if there is a significant and permanent deterioration in the inflation outlook, the monetary policy stance will be tightened. The CBRT's inflation forecast is 38 percent for the end of 2024 and 14 percent for the end of 2025.

According to the median of the Reuters survey, the policy rate is expected to be at 45 percent by the end of the year. The range in year-end forecasts is between 40 percent and 50 percent. In the survey conducted the previous month, the median of expectations was 47.5 percent.

The CBRT will announce its interest rate decision on Thursday, June 27, at 14:00.

News Source: 12punto