Morgan Stanley’s forecast for the policy rate TCMB

morgan stanley

Foreign institutions continue to provide predictions for the policy interest rate decision that the Central Bank of the Republic of Turkey (TCMB) will make in June.

Foreign institutions are collectively shaping their consensus towards the expectation that the Central Bank of the Republic of Turkey (TCMB) will make an interest rate hike decision.

According to the recent report by Morgan Stanley, it is predicted that the Central Bank of the Republic of Turkey (TCMB) will increase its policy interest rate to 20% in June and further raise it to 25% in August.

The report highlighted that based on the statements of the Minister of Treasury and Finance, Mehmet Şimşek, a more conventional policy approach with a depreciation of the Turkish Lira and higher interest rates is expected.

The report also mentioned that Şimşek’s appointment to the Ministry of Treasury and Finance is seen as a sign of a return to traditional monetary policy.

The institution’s economists, who anticipated a depreciation of the Turkish Lira and tighter financial conditions after the elections, stated that they do not expect as sharp of a depreciation as before, with year-end forecasts around 28.

The institution economists, who announced that they expect an interest rate hike this month for the first time in over two years, stated, “After Şimşek’s appointment to the Ministry of Treasury and Finance and the expected changes in the TCMB management, we expect normalization in policy rates. We believe that a gradual normalization will be preferred in monetary policy.”

They used the following statement: “We anticipate that the policy rate will increase from 8.5% to 20% in the meeting on June 22 and may reach 25% in August.”

While emphasizing the high level of uncertainty regarding interest rates, they stated, “Possible new appointments at the TCMB and the bank’s communication may lead to differences in our views prior to this month’s meeting.”

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