Goldman's TCMB comment: Reserves may turn positive

Goldman Sachs stated that the Central Bank of the Republic of Turkey maintained its forecast that the easing could start in the third quarter of the year in its assessment of the latest interest rate decision. The bank's economists stated that the appreciation of the TL will continue in 2024 and that reserves could also turn positive. The emphasis of the Central Bank of the Republic of Turkey (TCMB) on the real appreciation of the TL in its latest interest rate decision text also attracted the attention of foreigners. In a note prepared by Goldman Sachs economists Clemens Graffe and Başak Edizgil dated February 22, it was emphasized that the TCMB emphasized that the real appreciation of the TL is the main factor for disinflation. The economists maintained their previously stated easing forecast. Accordingly, the bank estimates that the easing in Turkey will start in the third quarter of the year. The bank's economists stated that they think that the current level of the policy rate is sufficient after the latest interest rate decision and the messages given in the decision text. According to Goldman Sachs economists, the bank focuses more on excess liquidity and rising credit cards. According to Goldman Sachs economists, while the CBRT did not signal an urgent new measure/tool, it once again stated that it would support the monetary transmission mechanism in the face of an unexpected easing in credit growth and deposit rates and that it would use sterilization tools when necessary. The report stated, "However, we continue to expect the CBRT to take new measures to prevent the recent increase in credit card spending." The report also included positive expectations regarding the Turkish lira and reserves. Goldman Sachs economists predicted that the TL would lose value due to foreign portfolio inflows and a narrowing current account deficit. In addition, Goldman Sachs economists stated that the CBRT's negative net reserves, excluding swaps, could turn positive in 2024.