Eyes on CBRT interest rate decision

The Central Bank of the Republic of Turkey will announce its interest rate decision at 14:00 under the shadow of inflation approaching 70 percent. The bank is expected to raise interest rates for the fifth time in a row. The median expectation reflected in the Bloomberg survey is that the increase will be 500 basis points, like the September interest rate decision. The bank's tightening cycle under the management of President Hafize Gaye Erkan has reached almost 22 percentage points. According to many investors, the fact that real interest rates are still in negative territory compared to the current inflation indicates that the tightening is not at a sufficient level. In addition, in the scenario of the Israel-Hamas conflict escalating, the risk of energy prices rising again may lead to reaching the psychological level of 40 percent earlier for many. According to Deutsche Bank economists, the TCMB will reach a weekly repo rate of 40 percent by the end of 2023 due to increasing geopolitical risks and its potential effects on inflation and the balance of payments. According to some economists, the approaching local elections may result in the TCMB choosing a 'wait-and-see' stance.