US investment banks made evaluations about the Turkish economy.
JPMorgan announced that the Central Bank of the Republic of Turkey (CBRT) increased its rate hike expectation at the monetary policy committee (PPK) meetings in September and October from 250 basis points each to 500 basis points.
The bank estimated that in light of its fiscal spending plan and rising inflation, the central bank would raise the interest rate by 10 percentage points in total over the next two months.
In its research note, the bank said in its research note, “Currently, we expect rate hikes to be front-loaded: taking into account the anticipated fiscal easing and upside inflation surprises, instead of the previous 250 BP increase forecast, 500 BP at the MPC meeting in September and 500 BP at the MPC meeting in October. We look forward to an increase,” he said.
JPMorgan added that there are “upside risks” to the year-end forecast of 35 percent and the end of 2024 forecast of 45 percent.
MORGAN STANLEY UP 5 POINTS
Morgan Stanley, one of the leading banks in the USA, has updated the Medium Term Program’s (OVP) interest rate expectations for the CBRT.
The note titled “OVP: More tightening is coming” signed by the two economists of the bank, Hande Küçük and Alina Slyusarchuk, also included new interest rate forecasts.
Morgan Stanley raised its Central Bank (CBRT) policy rate expectation from 30 percent for the end of 2023 to 35 percent.
The Bank expects the CBRT to increase interest rates by 500 basis points at its September meeting and by 250 basis points each in October and November meetings, so that real interest rates will pass into the positive zone at the end of 2023, according to the end-2024 inflation expectation of 33 percent.
The bank predicts that the CBRT will increase the policy rate to 40 percent after the elections in March 2024.
The new CBRT administration had increased the policy rate to 25 percent with an increase of 650 basis points at the June meeting, 250 basis points at the July meeting and 750 basis points at the July meeting.