CBRT May Make a Surprise Again on Thursday!

Before the Central Bank of the Republic of Turkey (CBRT) Monetary Policy Committee (PPK) meeting to be held on Thursday, foreign institutions and economists began to explain their expectations regarding the increase decision to be taken by the CBRT. According to published reports and expert opinions, the CBRT may implement a similar surprise interest rate increase decision it took last month at this month’s meeting.

Institutions and economists expect the Central Bank of the Republic of Turkey (CBRT) to make a major interest rate increase at the MPC meeting on Thursday. It is estimated that the CBRT will continue to follow a tight monetary policy within the scope of combating inflation and will focus on reducing the main trend of inflation.

Societe Generale CEEMEA Strategist Marek Drimal predicts that the CBRT may increase the policy rate to 31 percent with an increase of 600 basis points, above market expectations. The increase in inflation in Turkey and President Recep Tayyip Erdoğan’s support for inflation-fighting steps strengthens the idea that the Central Bank of the Republic of Turkey (CBRT) can exceed expectations.

Bluebay Asset Management Emerging Markets Senior Strategist Timothy Ash estimates that the CBRT will increase the policy rate by 500 basis points.

Economists participating in the AA Finance survey regarding the CBRT Monetary Policy Committee meeting estimate that the policy rate will be increased by 500 basis points and reduced to 30 percent. At last month’s meeting, the policy rate was increased by 750 basis points from 17.50 percent to 25 percent.

Other major banks share similar expectations. Banks such as JPMorgan and Morgan Stanley expect an interest rate increase of at least 500 basis points.

According to the report of UK-based HSBC, it is stated that the measures taken by the Turkish economy and economic management affect the expectations of foreign investors about the CBRT’s monetary policy. HSBC announces year-end policy interest rate expectations 32.5 percentWhile increasing it to , it maintains Turkey’s 2023 growth expectations at 4.4 percent and reduced its 2024 GDP growth forecast from 4.1 percent to 3 percent.

Barclays analysts, on the other hand, expect more limited moves after the 750 basis point shock increase from the CBRT in August. However, experts state that a higher interest rate decision is not completely ruled out. The UK-based banking giant predicts the CBRT policy rate as 35 percent for the end of the year and 40 percent for the end of 2024.

The Central Bank of the Republic of Turkey will announce the interest rate decision on September 21 at 14.00 after the next MPC meeting. Markets will follow this decision closely.

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