All eyes will be on the Central Bank

Market expectations are that the CBRT will increase the interest rate for the fifth consecutive meeting. Economists taking part in AA Finance’s expectations survey for the MPC meeting predicted the interest rate would rise by 500 basis points and be cut to 35 per cent. Although the 19 economists expected an increase in interest rates by the Central Bank, the predictions varied between 250 and 500 basis points. Economists’ forecast for the policy rate by the end of the year was 40 percent.

INCREASED BY 2150 BASE POINTS

CBRT abandoned its low interest rate policy with the change of economic personnel after the elections. In June, at the first MPC meeting chaired by Hafize Gaye Erkan, the interest rate was increased by 650 basis points to 15 percent. Increases in interest rates; It continued with 250 basis points in July, 750 basis points in August and 500 basis points in September. Thus, the interest rate, which before the May elections was 8.5 percent, was raised to 30 percent with an increase of 2,150 basis points.

While awaiting the Central Bank’s decision on interest rates, Germany’s Deutsche Bank issued a “hawkish” report on CBRT. The bank brought forward its expectation of the Central Bank’s 40 percent policy rate, which it had previously forecast for the post-election period in March 2024. Deutsche Bank predicted that the Central Bank would continue monetary tightening with increases of 250 basis points in November and December and that the interest rate would rise to 40 percent at the end of the year.

European interest rate decision to be announced

Another important interest rate decision of the week will come from the Euro Zone. The European Central Bank (ECB) will announce its interest rate decision on Thursday. Based on prices in the money markets, it is certain that the ECB will not change the official interest rate at next month’s meeting. At the September meeting the interest rate in Europe was increased by 250 basis points, to 4.50 percent.