Morgan Stanley Interest Rate Expectation Report for CBRT
In a Morgan Stanley report, it is expected that the CBRT will keep interest rates steady in September and cut them in October and December, while noting that this schedule could be brought forward if August CPI data comes in lower.
Morgan Stanley economists shared their expectations regarding the monetary policy of the Central Bank of the Republic of Turkey. The published report projects that interest rates will be kept steady in September, while pointing to October and December for potential cuts.
August CPI Expectation for the Interest Rate Cut Schedule
The published report emphasized that if next week's August inflation data comes in significantly lower than expected, the probability of the interest rate cut schedule in Turkey being brought forward will increase.
August Inflation Forecasts
Morgan Stanley economists, led by Georgi Deyanov, expect the August consumer price index, to be released on September 3, to show a monthly increase of 2.1 percent.
Additionally, the same report included projections that the annual inflation rate will materialize at the level of 31.8 percent.
Decline in Average Funding Cost
The Central Bank of the Republic of Turkey resuming one-week repo auctions this week was recorded as a significant development in monetary policy.
Following this step, the average funding cost declined from the 40 percent level to 37 percent for the first time since February.
Year-End Policy Rate Forecast
Evaluating the signs of easing in monetary policy, Morgan Stanley economists expect the CBRT to begin its rate-cut cycle in the final quarter of the year.
According to forecasts shared by bank analysts, the policy rate is projected to be lowered to the 35 percent level by the end of the year.