Morgan Stanley Mentioned The Possibility Of A Rate Cut By The CBRT

Morgan Stanley mentioned the possibility of a rate cut by the CBRT. The institution said that the CBRT has room for interest rate cuts.

Morgan Stanley economists noted that the Central Bank of the Republic of Turkey’s (CBRT) statement that the interest rate will be set above the estimated and actual inflation, together with the May inflation data, signaled that there is room for interest rate cuts. Morgan Stanley said, "19 percent policy rate and below 17 percent inflation shows room for rate cuts." Comapny said that this week's statement by the CBRT governor gave the message that a rate cut in June is not on the agenda. On the other hand, Morgan Stanley pointed out that the rate cuts may begin towards the end of summer in line with the pressures and President Erdogan's latest statement. Stating that interest rate cuts may start in the third quarter of the year as a result of the support of tourism revenues on the exchange rate, Morgan Stanley said, "We predict that the policy rate will be reduced by 300 basis points in 2021 and by 400 basis points in 2022, to 12%."

Erdogan: We Must Lower Interest Rates

President Recep Tayyip Erdogan, who was a guest on the TRT broadcast in the past days, said that he had a meeting with the CBRT Governor Şahap Kavcıoğlu and that it was imperative to reduce the interest burden. In his speech on interest rates, Erdogan made the following statements: "We have to lower the interest rates once, so we will find these places in July-August so that the interest will start to fall. Because if we remove the interest burden from investments and costs, we will enter a period of relaxation there as well, since it is the interest that triggers cost inflation." Immediately after President Erdogan's statement, the USD/TL exchange rate started to rise rapidly.