When will the Central Bank interest rate decision be announced, what is the interest rate expectation for February?

Despite the rebound in inflation, the CBRT completed the last cycle of 500 basis point interest rate cuts in November and kept the policy rate constant at 9 percent, in line with expectations at meetings held in December and January. Median estimates from 17 economists polled by Reuters show the CBRT will cut the policy rate by 50 basis points to 8.50 percent this month.

WHEN WILL THE CENTRAL BANK INTEREST DECISION BE ANNOUNCED?

The Central Bank’s Monetary Policy Committee (PPK) will announce its interest rate decision on Thursday, February 23 at 2:00 p.m.

HOW IS THE DECISION OF INTEREST EXPECTED?

Eight institutions participating in the survey predicted that the policy rate would remain constant, while nine institutions predicted that further reductions would begin. Seven of the surveyed institutions expect a 100 basis point policy rate cut on Thursday, while one institution expects a 50 and 200 basis point cut. Eight institutions expect the CBRT to keep the policy rate unchanged.

In the Kahramanmaraş-centered earthquake that occurred two weeks ago, search and rescue efforts ended outside Hatay and Maraş provinces, while the number of people who lost their lives in the quake exceeds 41,000. Two earthquakes with a magnitude of 7.7 and 7.6 in Kahramanmaraş caused extensive destruction in Elazig and northern Syria, which were later added to 10 provinces where approximately 13.4 million people lived.

The CBRT, which ended the cycle of interest rate cuts that began in November by stating that the 9% policy rate was enough, citing the loss of economic momentum, is being watched in the wake of the earthquake, the estimated cost of which is estimated between $50 billion and $100 billion.

In a research note, Barclays drew attention to the economic and political effects of the earthquake in Turkey, stating that they expected the CBRT to hold the policy rate constant as a reference scenario. “As a base case, we do not expect any change in interest rates in the first half of 2023, but the dovetail signals in the previous CBRT statement and the expected economic slowdown due to the earthquake increase downside risks in our forecast”.

JPMorgan, for its part, forecast a further drop of 100 basis points after the earthquake. The median response to the question on the interest rate forecast for the end of 2023 in the survey indicates that the CBRT will increase the policy rate to 14.5%. Year-end projections are in a wide range between 6% and 45% due to the election that may bring radical changes in economic policies. While the opposition adopts more conventional economic policies, the government follows an unusual policy focused on low interest rates and current account deficits. Before the earthquake, markets did not expect a significant change in policies in this context until the elections. Reuters