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Goldman Sachs Expect CBRT to Cut Rates to 25% by End of 2024

TURKEY
  • Goldman Sachs note that the CBRT was more specific than before regarding the necessary conditions for the first rate cut. It stated that the current level of the policy rate will be maintained until a significant decline in the underlying trend of monthly inflation is evident and inflation expectations and the CBRT’s projected forecast range converge.
  • Goldman Sachs say this is consistent with their thinking, in that they expect the CBRT to be able to start easing monetary policy from Q3 onwards, when they expect sequential inflation to start to fall sharply again after the pass-through from wage hikes and the removal of energy subsidies fade.
  • They see end-year inflation at 30% in 2024, well below consensus of 42.6%. With inflation falling faster than markets are pricing, Goldman Sachs think a mid-year start to the easing cycle would not be premature, in contrast to the current market pricing. They add that they do not think that an easing of policy in H2-2024 would place undue pressure on the TRY and think the CBRT will cut rates to 25% by the end of 2024.
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