Expectations for CBT's October Interest Rate Decision Announced

The Central Bank of the Republic of Turkey (CBRT) will decide the future of its policy rate at the Monetary Policy Committee meeting on Thursday, October 22 at 14:00. There are two main scenarios in the market: keeping the interest rate at 37 percent or reducing it to 36 percent with a 100 basis point cut.

The policy rate, which the CBRT reduced from 38 percent to 37 percent in January, had been left unchanged in March, April, June, July, and September. If the interest rate remains unchanged in October, the decision will stay the same for the sixth consecutive meeting. According to Turkish Statistical Institute (TurkStat) data, annual inflation dropped to 29.73 percent in September, falling below 30 percent for the first time since November 2021. Monthly inflation increased by 1.84 percent. While this decline in inflation supports expectations for an interest rate cut, the rise in the B index of core inflation indicators by 2.01 percent monthly in September revealed that price pressures persist.

Financial institutions' forecasts regarding the CBRT's October decision vary. While Morgan Stanley, JPMorgan, and Bank of America expect a 100 basis point cut, Goldman Sachs maintains its view that the interest rate will be kept at 37 percent until the end of the year. The decision is expected to have an impact on exchange rates, TRY deposits, and banking stocks on Borsa Istanbul.