Markets focused on the Central Bank of Republic of Turkey’s (CBRT) interest rate decision, the most important agenda of the week. The Monetary Policy Committee’s (MPC) interest rate step and its messages will be closely monitored.
MPC’s decision is due to at 14:00 local time.
Giving a message of determination in disinflation, the Central Bank (CBRT) is expected to continue its tightening steps by raising the one-week repo rate by 250 basis points to 37.5 percent.
The CBRT raised interest rates by 650 basis points in June, 250 basis points in July, 750 basis points in August, 500 basis points in September and October, totaling 2,650 basis points in five meetings. The general expectation is that the rate hike will continue this month but the pace will slow down to 250 basis points.
In global financial institutions, the view that the Central Bank will increase by 250 basis points in December and complete the year with a policy rate of 40 percent is gaining weight. Diverging from this view, Morgan Stanley thinks that the CBRT will pause interest rate hikes until the end of the first quarter of 2024 and the interest rate will be raised to 40 percent in April 2024.
JPMorgan: Forecasts that the policy rate will be raised by 250 basis points in November. Forecasts another 250 basis point hike at the December meeting.
Morgan Stanley: Expects the policy rate to increase by 250 basis points to 37.50 percent at the November meeting. It predicts that the CBRT will suspend interest rate hikes until the end of the first quarter of 2024 and the interest rate will be raised to 40 percent in April 2024.
Societe Generale: Expects the policy rate to increase by 250 basis points to 37.50 percent at the November meeting. With a similar move in December, it expects the policy rate to be raised to 40 percent at the end of the year.
Goldman Sachs: Predicts that the CBRT will continue to raise interest rates this year and the policy rate will rise to 40 percent. It predicts that interest rate cuts will start in the 3rd quarter of 2024, and the interest rate will decrease from 40 percent to 25 percent at the end of the year.