Morgan Stanley is one of the institutions predicting that the Central Bank of the Republic of Turkey (CBRT) will continue tightening at a slower pace. According to Morgan Stanley CEEMEA Economist Hande Kucuk, the policy rate is estimated to be increased by 250 basis points in the next meeting. The latest statement of the CBRT Monetary Policy Committee and the CBRT President Hafize Gaye Erkan also indicated that additional tightening steps regarding inflation may be taken. However, no specific forward guidance was given.
While there was no specific guidance on the Central Bank’s possible switch to a slow pace in the tightening cycle, Morgan Stanley predicts that the pace will slow down. They expect a smaller increase of 250 basis points at the next meeting as the monetary stance has mostly normalized and the impact of previous tightening measures will become more visible in the coming months. The note suggests that the CBRT is likely to reduce the rate of increase and assess the impact of cumulative tightening steps on economic activity and inflation.
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