Morgan Stanley Continues to Anticipate Interest Rate Cuts from the Central Bank of Turkey This Month

Morgan Stanley, evaluating the inflation figures for November released by TURKSTAT yesterday, stated that they maintain the view that the Monetary Policy Committee will lower interest rates at its December meeting. "Headline inflation in November again exceeded expectations; however, the upward surprise was primarily driven by unprocessed food, while service inflation continued to lose momentum," said Morgan Stanley. "In light of the Central Bank's recent communication, we believe today’s data is consistent with a moderate interest rate cut in December."

Morgan Stanley, which anticipates that the Monetary Policy Committee will start cutting rates at its meeting on December 26, stated, "We maintain our forecast of a 200 basis point rate cut starting in December; however, considering the third consecutive increase in headline inflation, the MPC may prefer a smaller cut (150 basis points) to signal a 'hawkish' rate-cutting cycle for the next year." They also noted that their inflation forecast for the end of 2024 is 45.1%, and for the end of 2025, they continue to expect inflation at 26% and the terminal interest rate at 28.5%.