French Societe Generale touched upon its evaluations about Turkey before the Central Bank of the Republic of Turkey’s interest rate decision tomorrow, in its Emerging Markets 2023 Q2 report. While the report reiterates the expectation of a 15 percent interest rate for the Central Bank meeting that will take place tomorrow, it was stated that the Center may return to the path of interest reduction before the March 2024 local elections.
In the report, it was stated that the CBRT is expected to enter the path of increasing interest rates and that the interest rates will rise to 25 percent in the coming months, while the tone of the Center will be “hawk”.
While it was stated that the size of the monetary tightening may not meet the expectations of some investors, analysts commented that the Turkish lira may find support against the dollar in 2023 due to the return of the economy to “orthodox” policies and the effect of 2023 tourism revenues. After the relative slowdown in tourism revenues after the summer months, SocGen wrote that uncertainties in the economy and finance will continue in Turkey.
In the report, SocGen analysts reiterated that they expect the interest rates to be raised to 15 percent in the MPC, which will take place tomorrow, and pointed out that the duo of Mehmet and Erkan aroused rational ground echoes in the economy, but Erdogan still did not break with his belief in low interest rates.
Analysts, who expect the Center to be on the scene with a hawkish attitude tomorrow, said that they expect a rate cut before the local elections that will take place in March 2024.
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