23.05.2025 12:22
The famous Morgan Stanley bank suggested that the Central Bank of the Republic of Turkey might surprisingly move its interest rate cut from July to June. According to the bank's commentary, the declining trend in inflation, the increase in net reserves, and market expectations strengthen this possibility.
The US-based investment bank Morgan Stanley pointed out that the Central Bank of the Republic of Turkey (CBRT) may lower the policy interest rate earlier than expected. According to the bank's economists, improvements in the inflation outlook and signals of easing in the market could bring the interest rate cut forward to June.
A SURPRISE MAY COME IN JUNE MPC
In an analysis prepared by Morgan Stanley's economists Hande Küçük, Arnav Gupta, and David Cueva, it was emphasized that the CBRT's decision not to change the forecast range during the presentation of the Inflation Report reflects its determination to reach the target. Additionally, the easing in interbank market interest rates and the CBRT's recent communication style indicate that a change in the policy interest rate may occur in the Monetary Policy Committee (MPC) in June.
FIRST INTEREST RATE CUT MOVED TO JUNE
The report stated that due to developments such as the decrease in local demand for the US dollar, the beginning of an increase in net reserves, and the continued downward trend in inflation, the interest rate cut schedule could be brought forward. It was noted that if May's inflation comes in line with expectations or better, and the Credit Guarantee Fund (KGF) support packages remain limited, the first cut could be made in June instead of July.
CARRY TRADE AND MARKET EXPECTATIONS
Morgan Stanley assesses that the carry trade strategy could yield positive results in the current economic environment. The bank noted that taking short positions in three-month USD/TRY forward transactions could be preferred. Additionally, it predicted that if the currency remains stable and the measures taken are targeted, real interest rates could support the disinflation process.