Economists Predict No Change in CBRT’s September Interest Rate Decision
As the Central Bank of Turkiye (CBRT) prepares for its upcoming September meeting, all eyes are on the potential impact of its interest rate decision. The CBRT’s policy rate, currently set at 50%, is expected to remain unchanged according to a survey conducted by AA Finance. All 15 economists surveyed believe that the bank will maintain its current rate.
Economists’ Interest Rate Projections
In the recent survey:
- All economists anticipate that the policy rate will stay at 50%.
- Median rate expectation: 50%
- Year-end forecast range:
- 2 economists predict 50%
- 2 economists forecast 47.5%
- 1 economist expects 46.5%
- 5 economists see the rate at 45%
This unified prediction reflects a cautious outlook as Turkiye continues to navigate economic uncertainties and inflationary pressures.
Why Hold the Rate?
Economists cite a variety of reasons for expecting the CBRT to hold its rate:
- Inflation Concerns: Keeping the policy rate steady can help contain inflation, a critical issue for the Turkish economy.
- Stabilizing Markets: A stable interest rate helps stabilize financial markets, reducing volatility for both local and international investors.
- Support for the Turkish Lira: With the lira under pressure, a higher interest rate may offer support against further depreciation.
Year-End Interest Rate Expectations
While economists expect no change in the policy rate for September, year-end forecasts show some variation:
- 2 economists expect the rate to remain at 50% by year’s end.
- 2 economists forecast a slight reduction to 47.5%.
- 1 economist predicts a rate of 46.5%.
- 5 economists expect the rate to drop to 45%.
This range suggests that economists are factoring in the possibility of easing inflationary pressures and potential adjustments in monetary policy by the CBRT.
What the Market is Watching
Investors are closely monitoring the CBRT’s upcoming interest rate decision, as it will have significant implications for various sectors, including:
- Currency Markets:
The Turkish lira has faced volatility in recent months, and the central bank’s decision could help stabilize the currency. - Stock Market:
The Borsa İstanbul will react to the CBRT’s policy, especially in industries like banking, energy, and real estate, which are sensitive to changes in interest rates. - Gold and Precious Metals:
Gold prices often move in response to central bank decisions. Investors in precious metals are keeping a close eye on any potential shifts in monetary policy.
The CBRT’s September Meeting Details
- Meeting Date: September 19, 2024
- Time: 14:00
- Expected Policy Rate: 50%
This meeting is a continuation of the central bank’s strategy to keep the policy rate stable, having left the rate unchanged at 50% during its August meeting.
Key Economic Indicators
In addition to the interest rate, several economic indicators will shape the CBRT’s decision:
- Inflation Trends:
Turkiye’s inflation remains a top concern, with the central bank striving to keep it under control. - GDP Growth:
The Turkish economy’s growth forecast for 2024 has been slightly reduced from 3.4% to 3.2%, with expectations for 2025 also adjusted to 3.4%. - Foreign Exchange and Global Markets:
Movements in global markets, especially in the Eurozone and the U.S., could impact the CBRT’s decision-making process. The bank will likely consider these external factors in its policy stance.
What’s Next for Turkiye’s Interest Rates?
While the CBRT is expected to maintain the current interest rate in September, future decisions will depend on a range of factors, including inflation data and economic growth. The following rate cuts are expected towards the end of the year as inflationary pressures ease and global markets stabilize.
Investors should watch for updates on key indicators like inflation, the Turkish lira’s performance, and any shifts in global economic conditions.
Summary of Projections
- Current Policy Rate: 50%
- September Forecast: No change
- Year-End Forecasts: Varying from 45% to 50%
As the CBRT prepares for its September 19 decision, the general consensus among economists is stability for now, with potential rate adjustments on the horizon.
Source: NTV / Prepared by Irem Yildiz