Foreign experts stated that the Central Bank of the Republic of Turkiye (CBRT) may avoid interest rate cuts this year, and investors may seek assurance that it will maintain its tight monetary policy.
In his assessment to the AA correspondent, Societe Generale Central and Eastern Europe, Middle East and Africa Strategist Marek Drimal predicted that the CBRT may leave the policy rate constant at 45% at tomorrow’s Monetary Policy Committee meeting.
Stating that they are waiting for verbal and written confirmation of the CBRT’s aim to keep the policy rate at 45% “as long as necessary”, Drimal stated that this may mean avoiding interest rate cuts for the rest of 2024.
Drimal stated that there may be increases in dollar/TL.
However, Drimal said that the dollar may weaken in global markets and Turkiye’s current account balance may improve due to seasonality, and that the luck of the TL is likely to turn in the 2nd quarter after the local elections on March 31.
“As a result, Turkish markets may attract a new inflow of foreign currency starting from the second quarter of 2024. This will most likely enable the TL to recover in the summer months and achieve significant yield gains,” Drimal said.
Investors may seek assurance in the fight against inflation
In Touch Capital Markets Senior FX Analyst Piotr Matys also predicted that the CBRT will keep the policy rate constant at 45%.
CBRT Governor Fatih Karahan said at the Inflation Report Information Meeting: “The current level of policy interest will be maintained as long as necessary. If it is understood that factors such as inflation expectations, price setting behavior, public expenditure and tax policy, wages, private consumption will cause a significant deviation in the inflation outlook from our forecast, the monetary policy stance will be tightened.” Recalling these statements, Matys noted that investors may seek assurance that the CBRT will continue its tight monetary policy until inflation is compatible with the target.
All economists participating in AA Finance’s expectations survey expect the CBRT to keep the policy rate constant.
The median of economists’ year-end policy rate expectations was 36.25%.
Source: AA / Prepared by Irem Yildiz