Goldman Sachs forecasts ambitious easing for Turkey

Goldman Sachs

Goldman Sachs predicted that Turkey’s policy rate, which was raised to 45 percent, will fall 20 points to 25 percent by the end of the year.

Goldman Sachs Group Inc. economists predicted that the Central Bank of the Republic of Turkey could shift to monetary easing with a sharp move and interest rates could fall 20 percentage points by the end of the year.

With inflation falling rapidly from the third quarter, the CBRT will cut its policy rate to 25 percent from 45 percent, according to a report by Goldman Sachs economists Clemens Grafe and Başak Edizgil.

This rate stood out as the lowest forecast among the forecasts compiled by Bloomberg.

“With inflation falling faster than markets are pricing in, we think it would not be premature to start the easing cycle mid-year, contrary to current market pricing,” Grafe and Edizgil wrote in the report.

The Central Bank of the Republic of Turkey (CBRT) raised its policy rate to 45 percent on Thursday, signaling that the required level of tightness had been reached.

Goldman’s rate cut expectation indicates a more optimistic inflation expectation than the CBRT’s 36 percent inflation forecast.

Goldman updated its USD/TL forecast for the twelve-month period to 37.

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