HSBC Report on Turkish Economy and CBRT Interest Rate Expectations

In a report penned by HSBC strategists Ali Çakıroğlu, Shubham Sharma, and Tolga Ediz, it was emphasized that it is likely for the Central Bank of the Republic of Turkey to realize a 200 basis point easing by the end of the year.

Expectations for the End of the Year

The report shared by HSBC strategists stated that the general consensus maintaining that the Central Bank of the Republic of Turkey is likely to proceed with a 200 basis point easing by year-end is preserved.

The strategists expressed that the market is already pricing in approximately 150 basis points of easing by the end of the year, and this is not an expectation difficult to surpass.

Uncertainty for Next Year

The report drew attention to the fact that the main issue for the markets is whether the easing cycle will spill over significantly into the next year.

It was conveyed that market pricing points to a limited easing cycle when compared to both general expectations and economists' forecasts, alongside previous periods.

Prudent Pricing Picture

The report noted that markets have taken a cautious stance by pricing in approximately 300 basis points of easing throughout the entire cycle.

It was recorded that this picture reflects risks originating from both domestic and foreign sources, including geopolitical tensions and high global interest rates.

Course of Interest Rates

It was emphasized through historical trends and analyses that short-term rates are likely to be positively affected when the easing process resumes.

It was stated that short-term interest rates would benefit the most as investors begin to price in a more aggressive or comprehensive interest rate cut process.