Morgan Stanley Expects Two Rate Cuts from CBRT by Year-End
Investment bank Morgan Stanley expects the Central Bank to keep interest rates steady on Thursday and to implement 100-basis-point cuts in both October and December during the final quarter.
US investment bank Morgan Stanley expects the Central Bank of the Republic of Turkey to keep its policy rate steady at 37 percent at Thursday's MPC meeting, and to lower the rate to 35 percent through two separate cuts in the final quarter of the year.
Interest Rate Expectations and Schedule
In a report prepared by Morgan Stanley economists Georgi Deyanov and Arnav Gupta, it was estimated that the CBRT will keep the policy rate steady at 37 percent at its Monetary Policy Committee meeting on Thursday.
Easing Steps in the Final Quarter
It was predicted that with the disinflation process regaining momentum in the fourth quarter, the CBRT will initiate a cautious rate-cutting cycle and lower the policy rate by a total of 200 basis points by the end of the year.
October and December Forecasts
Noting that the main trend in inflation will show an easing in the final quarter, analysts recorded that the rate-cut steps will likely be taken in the form of gradual 100-basis-point moves in October and December.
Long-Term Projections
The report also emphasized that gradual cuts will continue until the end of 2027, with the policy rate declining to 27.50 percent, though upside risks are maintained due to inflationary pressures.
TL Carry Trade Stance
Stating that monetary policy maintains its resilience despite challenging global and regional conditions, Morgan Stanley expressed that it maintains its positive and constructive stance on Turkish lira-based carry trade transactions.