MNI CBRT Preview - January 2025: Easing Pace to Be Maintained
Executive summary:
- The CBRT is widely expected to continue rate cuts with a 250bp reduction to the one-week repo rate following the start of its easing cycle in December.
- Signals from central bank officials indicate that market expectations of continued rate cuts appear accurate, while further declines in key inflation indicators will provide policymakers with room to act.
- As per the Bloomberg survey, all 22 analysts are expecting a 250bp rate move, which would take the central bank’s main policy rate to 45%.
See the full preview, with a summary of sell-side analyst views, here:
The central bank has previously stated that a sustained decline in both monthly inflation and inflation expectations are pre-conditions for easing, and the positive news on this front therefore provides policymakers with room to act. However, any cut is likely to be accompanied by Karahan’s reiteration of the central bank’s data-driven, meeting-by-meeting approach as it looks to embed a significant and persistent decline in the inflation outlook.
Recent commentary from central bank officials has largely stuck to the tone set in December, but a sources piece from Bloomberg simultaneously suggests that the CBRT appear comfortable cutting rates at the aggressive pace that is anticipated by markets. Bloomberg reported last week that “Three people briefed by policy-setting officials this week said Governor Fatih Karahan appeared comfortable with expectations for regular cuts at a pace similar to the 250 basis-point lowering enacted in December, with no pauses in the near term.”