Morgan Stanley Announced Its Interest Rate Cut Expectations From The CBRT

Morgan Stanley announced its interest rate cut expectations from the CBRT. Morgan Stanley said they would not be surprised by a 100 basis point cut.

Morgan Stanley stated that they expect the Central Bank of the Republic of Turkey to cut the policy rate by 50 basis points on October 21, but a cut of 50-100 basis points would not surprise them. Stating that the USD/TL exchange rate, which has risen above the 9.00 level, continues to rise further, the bank said that the exchange rate will continue to depreciate with the expectations that more interest rate cuts will take place. Mentioning the dismissal of three members of the Monetary Policy Committee, Morgan Stanley underlined the importance of how quickly the CBRT will act in interest rate cuts, and reminded that core inflation measures are still below 18 percent. Stating that they expect 50 basis point cuts at the three meetings to be held until the end of the year, Morgan Stanley strategists noted that they think the policy rate will decrease to 16.50% at the end of 2021 and to 12.50% at the end of 2022. Stating that they have increased their inflation forecasts from 15.8 percent to 16.2 percent for the end of the year, Morgan Stanley stated that they expect inflation to be 14 percent on average in 2022.