JPMorgan expects Turkish central bank to start rate cuts with 150 basis points
J.P. Morgan office. (AFP Photo)
JPMorgan expects the Central Bank of the Republic of Türkiye (CBRT) to kick off a gradual interest rate-cutting cycle with a 150 basis point reduction at the Monetary Policy Committee (MPC) meeting scheduled for Dec. 26.
The bank noted that following five consecutive months of inflation surprises on the upside, a measured rate cut by the CBRT appears likely this month.
Gradual easing expected in 2025
JPMorgan’s projections outline a systematic reduction in interest rates throughout 2025:
- A 150 basis point cut is expected in December, reducing the policy rate from 48.5%.
- Three consecutive 150 basis point cuts are anticipated in the first quarter of 2025.
- From April 2025 onward, the CBRT is projected to implement 200 basis point cuts at each MPC meeting.
- By the end of 2025, Türkiye’s policy rate is forecasted to drop to 30%.
However, JPMorgan cautioned that risks to inflation remain on the upside. “We see risks for higher interest rates for longer into 2025 as risks to inflation are on the upside,” JPMorgan said.
Inflation projections show mixed signals
The bank provided insights into Türkiye’s inflation trajectory:
- Monthly inflation (CPI) is expected to grow by 1.5% in December.
- Year-end inflation is forecasted to decline to 45.0%, down from November’s 47.1%.
“Although inflation momentum is likely to slow in December, we expect it to pick up in the first quarter of 2025 due to wages, administered price and automatic tax increases,” JPMorgan said.
