The decisions taken by the Central Bank of the Republic of Turkey (CBRT) at the Monetary Policy Committee (MPK) meeting on July 20 are eagerly awaited. 20 economists who participated in the expectations survey conducted by AA Finans predicted that the one-week repo rate (policy rate) would be increased by 500 basis points to 20 basis points.
According to the survey results, economists’ policy rate expectations vary between 17.50 percent and 21.50 percent. Foreseeing an average increase of 500 basis points, economists expressed their opinion that this decision would be taken. Year-end policy rate expectations were between 25 and 50 percent.
These forecasts can be considered as a signal that the CBRT will continue to implement a tight monetary policy in the fight against inflation. The increase in the policy rate stands out as one of the steps taken to control inflation and ensure stability in the economy.
The CBRT’s Monetary Policy Committee (MPC) meeting will be held on Thursday, July 20, and the markets will closely monitor the decisions to be taken. These decisions will be an important reference for the economy and finance sector and their effects on the markets will be closely monitored.
CPI expectations of market participants increased, growth forecast decreased
The results of the July Market Participants Survey of the Central Bank of the Republic of Turkey (CBRT) have been announced. The survey was answered by 41 participants, consisting of representatives of the real sector, financial sector and professionals.
According to the survey, participants’ current year-end consumer inflation (CPI) expectations increased compared to the previous survey and rose to 43.82 percent. In the previous survey period, this rate was determined as 38.55 percent. In addition, the 12-month CPI expectation rose from 30.65 percent to 33.21 percent, and the 24-month CPI expectation rose from 18.12 percent to 19.04 percent.
According to the expectations of the respondents, in July 2023, after 12 months, the CPI is expected to increase in the range of 27.00 – 32.99 percent with a probability of 21.06 percent. Likewise, after 24 months, CPI is estimated to increase with a probability of 48.21 percent in the range of 16.00 – 22.99 percent.
In the CBRT survey, the overnight interest rate expectation at the end of the current month in the BIST Repo and Reverse-Repo Market rose from 18.13 percent to 18.94 percent. The one-week repo rate expectation increased from 17.56 percent to 19.17 percent.
As for the exchange rate expectations, the current year-end dollar/TL expectation of the participants increased compared to the previous survey and was determined as 28.46 TL. Exchange rate expectation after 12 months is estimated as 31.42 TL.
Another result in the survey shows that there is a decrease in the growth expectation for 2023. The GDP growth expectation of the participants for 2023 decreased from 3.8 percent to 3.7 percent. The GDP growth expectation for 2024 decreased from 4.5 percent to 4.3 percent.
According to the CBRT’s Market Participants Survey, the increase in inflation expectations and the decrease in growth forecasts reflect the concerns about the economic situation. These data can be considered as an important indicator that should be taken into account while shaping the policy decisions of the central bank.
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