S&P Global's Outlook on Turkish Economy and CBRT Rate Cut Expectations

Kareen Vartapetov, S&P Global Ratings Director for CEE and Turkey, made evaluations regarding the macroeconomic outlook of the Turkish economy and stated that they expect the central bank to make an interest rate cut towards the end of the year.

Speaking to Bloomberg HT, Kareen Vartapetov, S&P Global Ratings Director for CEE and Turkey, noted that Turkey's position is at a more moderate point than expected. Stating that the inflation trajectory and second-round effects are key elements, Vartapetov expressed that domestic demand has weakened thanks to tight monetary policy. He emphasized that faster disinflation and a strong reserve position would be positive for the country's credit rating.

Conveying that external conditions are uncertain and food prices may remain volatile and high for a long time, Vartapetov stated that there are strong signals that domestic demand is slowing down. Accordingly, stating that they expect an interest rate cut from the CBRT towards the end of the year, Vartapetov added that the bank might also prefer a balanced approach. In its latest report, S&P Global noted that households' confidence in the lira continues and the effects of energy shocks stemming from the war in the Middle East can be overcome.