Barclays Predicts CBRT Interest rate Cut Despite August Inflation Surprise
Despite a higher-than-expected inflation rate in August, Barclays economist Ercan Ergüzel anticipates the Central Bank of the Republic of Türkiye (CBRT) will implement an interest rate reduction at its upcoming meeting.
August’s monthly inflation registered at 2.04%, exceeding initial estimates of 1.75%. This increase was largely driven by elevated food prices. Annual inflation reached 32.95%.
Economic Growth and inflation Trends
According too Barclays’ report, the slower-than-anticipated decline in inflation appears linked to robust economic activity. The current trajectory suggests potential economic growth of approximately 3.5% in 2025.
ergüzel forecasts a 250 basis point interest rate reduction from the CBRT in the coming week. However, he emphasizes the need to assess the impact of recent political developments on the investment strategies of both domestic and international investors.
Carry trade Impact and CBRT Outlook
Recent data indicates approximately $3 billion in outflows related to carry trade activity. Despite these political and financial shifts, Ergüzel believes the CBRT is likely to proceed with its plans for monetary easing.
The Bloomberg HT questionnaire revealed a consensus expectation of 1.75% for monthly inflation and 32.60% for annual inflation in August, figures that were ultimately surpassed by the actual results.
