Deutsche Bank Anticipates a 150 Basis Point Rate Cut from the Central Bank of Turkey

Forex - Deutsche Bank (NYSE:DB) stated that it expects the Central Bank of Turkey (CBRT) to implement an interest rate cut during the Monetary Policy Committee meeting on December 26, and noted, "The current level of real interest rate buffer provides room for the CBRT to start the easing cycle at a measured pace."

Moreover, Deutsche Bank revised its previous estimate of a 250 basis point interest rate cut to 150 basis points.

In its report, Deutsche Bank stated, "We anticipate that the CBRT will initiate the easing cycle with a cautious interest rate cut. This adjustment reflects the continued upward surprises in inflation over the last three months, despite moderate improvements in the core inflation trend. While the current real interest rate buffer provides space for easing, we expect the CBRT to adopt a cautious stance with a smaller cut of 150 basis points, effectively managing inflation expectations with a data-dependent approach and signaling potential pauses in the easing cycle along with hawkish guidance in its accompanying statement. Additionally, we may see an adjustment in policy framework, such as narrowing the interest rate corridor, to send a hawkish signal to the market to alleviate concerns about early rate cuts."