Turkish Central Bank

The Turkish Central Bank is on track to deliver another 250 basis points rate cut when its Monetary Policy Committee meets this month, according to Morgan Stanley.

The Central Bank started the easing cycle in December by lowering its policy rate from 50 percent to 47.5 percent in a move that marked the first cut in nearly two years.

Turkey's President Tayyip Erdogan said on Saturday that there would be more interest rate cuts in 2025 after the central bank cut its key rate by 250 basis points to 47.5% this week.

The Turkish Central Bank has lowered its key interest rate by 250 basis points to 47.5 percent, delivering the first cut in nearly two years.

Most economists had expected the bank to reduce the key rate, the one-week repo auction rate, by 150 basis points.

The last cut was in February 2023.

The Turkish Central Bank is expected to start the easing cycle this week after keeping the key policy rate steady for eight months.

Most economists surveyed by state-run Anadolu Agency forecast that the bank would slash its policy rate by 150 basis points from the current 50 percent.

As widely expected, the Turkish Central Bank has kept the key interest rate, the one-week repo auction rate, on hold for an eighth straight month at 50 percent.

While inflation expectations and price behavior tend to improve, they continue to pose risks to the disinflation process, the bank said in a statement released after the Monetary Policy Committee meeting on Nov. 21.

The strong interest in Türkiye clearly shows that the economic program is progressing on the right track, Finance Minister Mehmet Şimşek said, assessing his recent visit to the United States.

Analysts at some international banks are now expecting the Turkish Central Bank to deliver a rate cut in November after the bank altered its guidance.

In a statement accompanying its rate decision, the bank said on Sept. 19 that "monetary policy tools will be used effectively in case a significant and persistent deterioration in inflation is foreseen."

Declines in inflation over the next months will further boost the rise in the share of Turkish Lira deposits in total, according to a post on the Turkish Central Bank's blog.

The share of lira deposits in total deposits grew from 48.4 percent to 51.8 percent in July-August, the blog post by researchers and economists working at the bank stated.

Türkiye has changed its economic policies, garnering attention from investors worldwide, said U.S. investor and financial expert Jim Rogers, adding that foreign investors will "come back but it takes a while."

"If Türkiye can show us that they are doing the right thing now, investors will come back," Rogers told Anadolu Agency.

Following the promising June CPI print, international banks have started to lower their inflation expectations for Türkiye.

Last month, consumer prices increased by 1.64 percent from May, which was lower than expected. The annual inflation rate slowed from 75.45 percent to 71.6 percent.