The Turkish central bank is expected to keep interest rates steady again during next week’s meeting, two polls suggested recently, with one indicating a rate-cut scenario for November.
The Central Bank of the Republic of Türkiye (CBRT) is seen to be holding interest rates steady at 50% until about November, when a first cut is seen, according to a Reuters poll on Friday that suggested expectations have shifted to a slightly later easing cycle.
All 16 poll respondents expected the bank to hold rates at a policy meeting next week, which would mark the sixth straight month of steady policy after an aggressive tightening campaign that began in June last year.
The poll by Anadolu Agency (AA), which included 15 economists, held the exact expectations.
The one-week repo rate was seen dipping to 47% by year-end, based on the median response of 14 economists in a Reuters poll, with their forecasts ranging from 45% to 50%. That compares to a year-end median forecast of 45% in the survey a month ago.
Moreover, the average median of economists in the AA survey for year-end policy rate expectations was 46.65%.
Of the economists who shared their expectations for the end of the year, two predicted that the policy rate would be 50%, the other two estimated it at 47.5%, one predicted 46.5%, and five suggested it would be 45%.
Annual inflation in Türkiye fell to 51.97% in August from a peak in May and is expected to continue the downward trend in the upcoming months. A tight monetary policy and a slowdown in domestic demand will bring it to around 40% by year-end.
To tackle inflation that has soared for years, the central bank has raised its policy rate by 4,150 basis points since mid-2023. It has maintained that it will keep its monetary policy tight until inflation aligns with its targets.
The central bank will announce its next interest rate decision at 11 a.m. GMT (2 p.m. local time) on Sept. 19.
The rate setting of the Turkish central bank comes just a day after the widely anticipated cut of the U.S. Federal Reserve (Fed), the first since 2020, although it remains unclear whether it would be a small 25 basis point cut or a more aggressive cut of 50 basis points.
The week, in general, will be crowded with decisions of policymakers from Brazil, the U.K., Norway, Canada and Japan, whose Bank of Japan (BOJ) just recently ended negative rates.
Analysts say the CBRT could hint more clearly at its expected policy path and possibly adjust or even drop a past repeated pledge that it was prepared to tighten more as needed.
The bank expects inflation to fall to 38% and 14% at end-2024 and end-2025, respectively. In the recently updated medium-term program (MTP), the government sees end-year inflation of 41.5%.
