Foreign experts predict that the Central Bank of the Republic of Turkiye (CBRT) may be nearing the end of its tightening cycle in monetary policy.
While the decisions to be taken from the Monetary Policy Committee (MPC) meeting to be held by the CBRT tomorrow are in the focus of investors, it seems that the signals given by the bank in the last meeting were effective above expectations.
Marek Drimal, Societe Generale Central and Eastern Europe, Middle East and Africa Strategist, said in his evaluation to the AA correspondent that the CBRT increased the policy rate by 500 basis points to 40% in the last meeting and made a statement that the level of monetary tightness required for the establishment of disinflation was significantly approached.
Accordingly, Drimal stated that the pace of monetary tightening may slow down and the tightening cycle may be completed in a short time, and that as a result of this guidance, the CBRT may reduce the tightening rate by half at the December meeting.
Drimal predicted that the bank will increase the policy interest rate by 250 basis points to 42.50%.
“Inflation may drop to 39%”
Stating that the CBRT may increase the policy rate to 45% by making another 250 basis point increase in January, Drimal stated that inflation may rise to 68% in May 2024 and then decrease rapidly and decrease to 39% at the end of 2024.
In Touch Capital Markets Senior FX Analyst Piotr Matys also stated that the CBRT’s expected interest rate increase may be accompanied by the bank’s official announcement that interest rates are high enough.
Noting that there is a very attractive carry trade opportunity in TL in nominal terms, Matys said that, however, in real terms, TL is not yet attractive enough for carry trade investors.
Stating that this situation may change when inflation in Turkiye finally reaches its peak in the first half of the year and begins to decline, Matys stated that this may coincide with the Fed starting to reduce interest rates in the second half of 2024.
Economists participating in AA Finance’s expectations survey regarding the CBRT Monetary Policy Committee (MPC) meeting estimate that the one-week repo auction interest rate (policy rate) will be increased by 250 basis points to 42.50%.
Source: AA / Prepared by Irem Yildiz