MNI CBRT Preview - Nov'24: No Change to Rates or Stance Yet
Executive Summary:
- The CBRT is expected to keep its one-week repo rate on hold at 50% with month-on-month CPI readings showing well-above 2% and inflation expectations still elevated.
- However, President Recep Tayyip Erdogan’s recent comments, where he said interest rates will fall together with inflation, could suggest that a cut at the December meeting is on the cards.
- All analysts surveyed in this document expect no change to the repo rate this month, though some flag the possibility of a rate cut in December.
See the full preview, with a summary of sell-side analyst views, here:
The CBRT presented its latest inflation report earlier this month, where it raised the year-end inflation forecast for 2024 by 3.9ppts to 44% and the end-2025 forecast by 3.5ppts to 21%, bringing the projections more in-line with sell-side estimates. In a press conference accompanying the release, Governor Fatih Karahan said "The underlying inflation has been improving, albeit at a slower pace than we had projected," adding that the increased coordination of monetary and fiscal policies will contribute to the disinflation process. "We will maintain our decisive monetary stance to ensure that disinflation continues," Karahan said.
Comments from PresidentRecep Tayyip Erdogan following the presentation of the report have attracted some market interest. “From now, the inflation rate will constantly be in decline. No one should doubt that” Erdogan said, adding that “You know my stance. God willing, inflation rates will decline together with interest rates.” Comments from Erdogan on monetary policy have been increasingly scant since Karahan took the helm of the central bank back in February. The latest remarks allude to the President’s more unconventional view that inflation falls when borrowing costs are reduced, potentially raising pressure on the CBRT to start its easing cycle sooner than most anticipate.