Will the CBRT Cut Rates Again in December? Analysts Split After Latest Move

The Central Bank of Turkey (CBRT) cut its policy rate by another 100 basis points to 39.5% in line with expectations, signaling a cautious continuation of its easing cycle. Yet, major brokerages including Şeker, Trive, Gedik, İş and Integral Investment say the December rate decision could go either way — hinging largely on upcoming inflation data and global risk sentiment.

CBRT Stays Cautious Despite Another Rate Cut

The Central Bank of Turkey’s October Monetary Policy Committee (MPC) meeting ended with a 100-basis-point rate cut, lowering the policy rate to 39.5%, in line with market expectations.

Inflation May Outpace Turkey’s Targets as Central Bank Slows Rate Cuts

According to Şeker Investment, the tone of the statement remained “cautious despite the rate reduction,” as the bank underscored risks stemming from rising core inflation and deteriorating pricing behavior.

Şeker analysts noted that the CBRT continues to act on a “meeting-by-meeting and inflation-focused” basis, stressing that the Bank will not allow excessive market volatility.

“If no new local or global shocks occur, we expect cautious and gradual rate cuts to continue until year-end,” Şeker said.

However, the report also highlighted that improvements in the global inflation outlook could pave the way for larger-than-expected rate cuts in the months ahead.

Trive Investment: December Cut No Longer a Given

Trive Investment pointed to a subtle but significant wording change in the October statement that may signal a pause in December.

The September text had read, “The magnitude of steps will be reviewed,” while the October statement changed this to “The magnitude of steps is being reviewed.”

According to Trive analysts, this small linguistic shift “creates the impression that a December rate cut is no longer guaranteed.”

“The uncertainty has increased, and markets have already priced in a weaker rate-cut expectation from the CBRT,” the note said.

Trive believes the October CPI could rise around 2.5% month-on-month, in which case the October decision may have marked the final rate cut of 2025.

Integral Investment: A Signal to the Real Economy

Integral Investment interprets the CBRT’s modest cut as a message of moral support to the real sector during a period of tighter credit conditions.

“While the disinflation process will continue, the Bank is signaling that it has not turned its back on the real economy,”
the note said.

The brokerage added that the move reflects the CBRT’s strategy of “small, calibrated steps in monetary easing without derailing disinflation.”

Market reaction was muted: both the banking index and the Borsa Istanbul benchmark (BIST 100) held their ground, suggesting the decision was met with “a moderate pricing response.”

Gedik Investment: Inflation Data Will Drive December

Gedik Investment expects the CBRT to maintain its easing bias into December, with another 100-basis-point cut possible if inflation allows.

“If October inflation hits 3% and November inflation exceeds 2%, a December rate cut would become significantly harder,”
the firm cautioned.

Gedik analysts said the November 7 Inflation Report meeting will be key for market expectations, as the CBRT may have to revise its year-end inflation forecast upward from the current 25–29% range.

They added that whether the Bank adjusts its 2026 forecast — currently 13–19% — will send an important signal on its future policy stance.

“If the CBRT keeps its forecast unchanged, it implies a very tight policy outlook for 2026,”
the report noted.
Conversely, an upward revision would suggest the Bank is “more tolerant of inflation” and may prefer a softer disinflation path.

İş Investment: A Bank Willing to Tolerate Higher Inflation

İş Investment said the October meeting showed that the CBRT prefers “smaller steps rather than a firm pause,” even amid worsening inflation expectations.

“In an environment where market inflation expectations rose to 22.1%, a central bank that takes its target seriously would have opted to pause,”
the report stated, arguing that the CBRT “does not appear strongly committed” to its 16% end-2026 target and may “tolerate a slower disinflation process.”

İş analysts expect October inflation to come in at 2.8%, followed by 1.65% in November, as seasonal and exchange rate factors ease.

Assuming a 22% minimum wage hike in January, İş Yatırım projects further rate cuts of around 150 bps per month, leaving the policy rate at 38% by end-2025 and 26% by end-2026, with inflation forecasts of 32% and 22.5%, respectively.

Deeper Uncertainty Around Disinflation Path

Across all research notes, a common theme emerges: the disinflation process has slowed and risks have risen.

While the CBRT still maintains that “demand conditions remain disinflationary,” several houses dispute this assessment. İş Yatırım, for instance, said its own output gap models “do not strongly support” a disinflation phase.

Analysts also noted that Turkey’s gross reserves have shown limited improvement, once valuation effects from gold are excluded — a sign that FX inflows remain insufficient to sustain aggressive easing.

Another key shift in the October statement was the removal of references to the Medium-Term Program, which İş Yatırım interprets as a “hawkish message that the CBRT will act independently of fiscal policy coordination.”
However, as the firm cautioned, “this verbal hawkishness loses effectiveness when not backed by stronger action.”

Conclusion: CBRT Likely to Stay on a Cautious Path

In sum, analysts are divided on whether the CBRT will cut rates again in December:

• Şeker Investment expects gradual cuts to continue barring new shocks,

• Integral Investment sees small, morale-boosting moves possible,

• Trive Investment and İş Investment warn that the Bank may pause, and

• Gedik Investment ties any further cut squarely to inflation outcomes.

With inflation likely to remain high through November and the November 7 Inflation Report poised to set the tone, the CBRT’s next move will depend on whether its cautious optimism on disinflation proves justified.

For now, the message seems clear: the CBRT remains “easing-biased but data-dependent.”

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