Morgan Stanley: We Expect the Central Bank of Turkey to Cut Rates by 250 Basis Points in January

Morgan Stanley (NYSE:MS) stated that the better-than-expected headline inflation data for December suggests that the Central Bank of Turkey (CBRT) is likely to proceed with another 250 basis point cut in January. In its assessment, the bank noted the significant improvement in sticky services, including rents, and indicated that the December data would provide confidence to the CBRT for a further 250 basis point rate reduction on January 23.

Morgan Stanley also mentioned that it expects monthly inflation to rise in January and February, while at the same time, it anticipates headline inflation to continue its decline toward an annual rate of 38% by March. The bank's report stated, "With the continuation of a tight monetary stance, wage and price increases in the new year will keep second-round effects limited, allowing the CBRT to continue adjusting real rates in line with the decline in current and expected inflation. We maintain our forecasts of 26% annual inflation and a 28.5% policy rate by the end of 2025."