BofA Economist Predicts December Policy Rate Cut from Turkish Central Bank

Zumrut Imamoglu Expects Policy Rate Reduction Pending Inflation Trends

Bank of America Merrill Lynch’s Turkiye Economist, Zumrut Imamoglu, anticipates that the Central Bank will consider cutting its policy rate in December, depending on inflation trends over the next three months. As the Central Bank, influenced by Treasury and Finance Minister Mehmet Simsek, prepares for another interest rate meeting tomorrow, expectations are that the rate will remain at 50%, with attention focused on the accompanying statements.

Speaking to Berfu Guven on CNBC-e, Imamoglu emphasized the importance of monitoring the pace of disinflation in Turkiye. She noted that while inflation initially drops quickly, it tends to slow down, presenting challenges. Imamoglu predicts that the Central Bank will wait three months before making a move on interest rates, stating, “We need to see where inflation stabilizes over the summer. June’s inflation data is critical for the Central Bank. They have taken steps on the liquidity side, and I don’t expect any new measures in the short term.”

Imamoglu continued, “We have included a rate cut in December in our base scenario. The year-end inflation expectation is 42%. The earliest opportunity for a rate cut appears to be in December, and if inflation approaches 38%, a reduction could occur. We expect at least two credit rating upgrades within the next year.”

Source: / Prepared by Irem Yildiz

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