Year-end interest rate expectations updated following Central Bank's rate hike!

The Central Bank of the Republic of Turkey (TCMB) announced its highly anticipated interest rate decision yesterday.

The policy rate was increased by 350 basis points, rising from 42.5 percent to 46 percent.

This surprise move by the Central Bank, which raised rates for the first time since March 2024, has led to updates in the forecasts of foreign financial institutions.

JPMorgan: 'Hikes will continue in July'

US banking giant JPMorgan raised its year-end policy rate forecast, which it had previously announced at 35 percent, to 38 percent. According to the institution, the Central Bank will skip June but will continue tightening in July with a new 200 basis point hike. Its inflation forecast was raised from 29.5 percent to 30 percent, particularly due to agricultural frost events.

Morgan Stanley: 'Expectations for 2025 revised upward'

US-based investment bank Morgan Stanley also updated its policy rate forecast. Raising its year-end 2024 forecast from 33.5 percent to 36 percent, Morgan Stanley projected that inflation would reach 29 percent by the end of the year. While the TCMB's aggressive tightening move is being interpreted as a 'message of determination' in international markets, it is noted that future steps will be shaped by the trend in inflation.

Goldman Sachs: 'Rate cut forecast, rates revised'

US investment bank Goldman Sachs maintains its view that the Central Bank will begin cutting interest rates in July. However, the institution, which raised its year-end interest rate forecast from 28.5 percent to 33 percent, pointed out that the disinflation process may proceed more slowly than expected.

News Source: 12punto