{"id":120480,"date":"2025-09-05T10:07:09","date_gmt":"2025-09-05T10:07:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/120480\/"},"modified":"2025-09-05T10:07:09","modified_gmt":"2025-09-05T10:07:09","slug":"foreign-banks-expect-turkish-central-bank-to-downsize-rate-cut","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/120480\/","title":{"rendered":"Foreign banks expect Turkish central bank to downsize rate cut"},"content":{"rendered":"

Global banking giants, including JPMorgan and Morgan Stanley, expect T\u00fcrkiye\u2019s central bank to scale back a potential interest rate cut next week after a higher-than-expected inflation reading Wednesday.<\/p>\n

Both Wall Street banks now anticipate that the Central Bank of the Republic of T\u00fcrkiye (CBRT) will opt for a 200 basis-point cut, following a 300-point reduction at its last meeting in July. This marks a downward revision from earlier expectations of a 300-point cut.<\/p>\n

Official data<\/a> showed inflation at nearly 33% annually and more than 2% monthly, following also strong economic growth of 4.8% in the second quarter. Economists now assume the bank may consider a smaller cut, despite earlier projections that it would continue reductions of the same magnitude through the end of the year.<\/p>\n

The central bank returned to easing by cutting its main one-week repo rate by 300 basis points to 43% at its last meeting, after hiking rates in April in response to brief market volatility following the arrest of Istanbul Mayor Ekrem Imamo\u011flu.<\/p>\n

JPMorgan said it now sees upside risks to its year-end inflation forecast of 29.5%, citing a reversal in earlier food price declines and strong domestic demand. The bank expects inflation to rise to 31.8% year-on-year in September, partly driven by back-to-school services repricing. Turkish officials have also noted that while disinflation continued, drought and frost affected food prices in August.<\/p>\n

The central bank “is likely to keep the policy rate well above headline CPI inflation to prevent dollarization among Turkish residents,” JPMorgan said in a research note.<\/p>\n

Meanwhile, Barclays economist Ercan Erg\u00fczel said that despite the inflation surprise in August, the bank still expects an interest rate cut at the next meeting, projecting a 250-point reduction.<\/p>\n

JPMorgan also forecasts further 200-point reductions in October and December, which would bring the policy rate to 37% by year-end, slightly above its earlier estimate of 36%.<\/p>\n

The central bank is scheduled to hold its policy meeting next Thursday.<\/p>\n

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