TCMB's Monetary Policy and Expectations: Foreign Analyst Insights. đčđ·đž
Turkish Central Bank (TCMB) is approaching the end of its tightening cycle, according to foreign experts, with expectations set on the upcoming Monetary Policy Committee (MPC) meeting.
Societe Generale's Marek Drimal notes TCMB's significant 500 basis point increase in the policy rate to 40% in the last meeting, indicating a substantial step toward establishing the necessary monetary tightness for disinflation.
Drimal suggests the pace of monetary tightening could slow, and the tightening cycle might conclude soon, possibly leading to a 50% reduction in tightening speed in the December meeting.
Predicting another 250 basis point increase in the policy rate to 42.50%, Drimal foresees TCMB might make an additional 250 basis point hike in January, reaching 45%.
In Touch Capital Markets' Piotr Matys mentions the possibility of TCMB officially stating that interest rates are sufficiently high accompanying the expected rate hike.
While noting a lucrative carry trade opportunity in nominal terms for the Turkish Lira (TL), Matys highlights that, in real terms, TL might not be attractive enough for carry trade investors yet.
Matys suggests the attractiveness of TL for carry trade investors could change as Turkey's inflation peaks in the first half of the year and begins to decline, potentially aligning with the Fed starting interest rate cuts in the second half of 2024.
According to AA Finans' economist survey, experts anticipate a 250 basis point increase in the one-week repo auction interest rate (policy rate) to 42.50% in the upcoming TCMB MPC meeting.
