Experts predict that the Central Bank of Turkey will lower the interest rate for the first time by the end of this year, planning to reduce inflation to 14% by the end of 2025.
At a meeting on Tuesday, July 23, the Central Bank of Turkey kept the key rate at 50% per annum, according to a message on the regulator's website.
A source: tutu.ru
The Central Bank of Turkey noted that a significant decrease in core inflation was recorded in June. In July, the regulator expects a temporary acceleration of inflation under the influence of non-monetary factors, but this growth will be limited. According to the regulator, the latest data confirm that domestic demand, while remaining pro-inflationary, continues to slow down.
Taking into account the delayed effect of tightening monetary policy, the regulator will make decisions aimed at creating the necessary conditions to achieve the target inflation rate of 5% in the medium term.
All economists surveyed by Bloomberg expected the Turkish regulator to keep the key rate at 50% at Tuesday's meeting. Major banks such as Deutsche Bank and Goldman Sachs are predicting a rate cut in Turkey by the end of this year. Deutsche Bank assumes that the rate will be cut twice in December, Goldman Sachs expects the first reduction at the end of the third quarter, and Barclays predicts a decrease in November or December.
"Any of our actions on interest rates should be aimed at achieving the inflation target by 2025 and beyond," Turkish Central Bank Governor Fatih Karahan said in an interview with Bloomberg.
Karakhan said that the Central Bank plans to achieve inflation of 14% by the end of next year. At the same time, according to a June survey by the Central Bank of Turkey, residents of the country expect inflation at 71.5% in 12 months.
In June 2024, inflation in Turkey decreased for the first time in eight months, amounting to 71.6% year-on-year, compared with 75.45% in May, according to the Turkish statistical Institute Turkstat. The largest increase was observed in the field of education — 107.11%, and the lowest — in the prices of clothes and shoes — 47.84%.
The Central Bank of Turkey last changed the rate in March, raising it by 500 bps after the February pause in the cycle of tightening monetary policy.
According to Trading Economics, the last time the rate of the Central Bank of Turkey exceeded the current value was 22 years ago — in April 2002 it was 54%, but in May of the same year it was reduced to 48%.
Since the summer of 2023, the Central Bank of Turkey has raised the rate nine times to slow inflation, increasing the cost of borrowing by 4150 bps. The first increase in this cycle occurred in June 2023, when the rate increased from 8.5% to 15% per annum. In July 2023, the rate was increased to 17.5%, in August to 25%, in September to 30%, in October to 35%, in November to 40%, in December to 42.5%, in January 2024 to 45%, and in March to 50%. In April, May and June, the rate remained at the same level.
A source: https://finance.mail.ru/2024-07-23/v-nestle-rossiya-oprovergli-soobschenie-o-vozobnovlenii-proizvodstva-kitkat-62053606/?from=swap&swap=2
