MNI CBRT Preview - September 2024: Too Early to Start Easing

MNI (LONDON) - Executive Summary:

• The CBRT is expected to keep its one-week repo rate unchanged at 50% and maintain a hawkish tilt to its communication. Among sell-side, analysts remain divided over the timing of the first rate cut.
• Some see an easing cycle commencing as soon as the October or November meetings, while others expect rates to remain on hold through the remainder of the year.
• Guidance in the policy statement will therefore be closely watched, in particular whether officials will stick with its tightening bias or shift to a more neutral stance.  

See the full preview, with a summary of sell-side analyst views, here:

MNICBRTPrevSep24.pdf

Given that underlying inflation data is not yet consistent with the CBRT’s conditions for the start of rate cuts, no sell-side analyst is expecting a change to the repo rate at this juncture. However, some flag the potential for tweaks to the central bank’s guidance. Specifically, a change to the following line in the policy statement: “monetary policy stance will be tightened in case a significant and persistent deterioration in inflation is foreseen” could signal the imminent arrival of rate cuts. While there is no unanimous view over the projected path for policy, some market participants anticipate that a further drop in headline inflation from the summer peak will justify cuts potentially as early as next month, though others say reaching inflation targets will require rates to be held steady for the remainder of the year.