🏦 Major Global Banks Expect Turkish Rate Cuts as Inflation Eases

Citi, Deutsche Bank, and HSBC Forecast Further Easing by the Central Bank (CBRT) Despite Persistent Price Pressures

ISTANBUL – Following the release of the latest inflation data, several major global investment banks—including Citi, Deutsche Bank, and HSBC—have shared their updated forecasts for the Turkish Central Bank’s (CBRT) monetary policy, unanimously anticipating a continuation of the easing cycle.

The CBRT had already reduced its policy rate to 39.50% at its October meeting.

Turkey’s Seasonally Adjusted Inflation Falls Below Expectations, Opening Door for Possible Rate Cuts

📉 Citi: Balancing Slow Growth and High Expectations

Citi’s report noted that while inflation slowed in October, underlying pressures remain challenging. The bank believes the current economic climate creates a complex scenario for the CBRT:

“We believe the challenging inflation outlook, including elevated expectations, set against a backdrop of subdued economic activity, creates a complicated setting for monetary policy.”

“On the one hand, receding growth expectations and stagnant labor market dynamics may make it difficult for the Central Bank to sustain a restrictive stance for a prolonged period. On the other hand, the deviation of inflation expectations from the Central Bank’s interim targets… make a strong case for a cautious easing cycle.”

Balancing these factors, Citi analysts anticipate the policy rate will reach 38.50% by the end of this year.

💯 Deutsche Bank Forecasts 100 Basis Point Cut

Deutsche Bank stated that they still foresee a 100 basis point rate cut at the CBRT’s December meeting. The bank noted that the October inflation data came in lower than both market expectations and their own forecast:

“October inflation data stood at 2.55% month-on-month. This came in below both market expectations and our 2.7% forecast. Annual inflation retraced to 32.9% after a temporary increase in September, confirming that the disinflation trend is continuing, albeit at a slower pace.”

While acknowledging that accelerating the easing cycle immediately after the October cut might be difficult, Deutsche Bank suggests that reduced short-term political uncertainty and lower financial stability risks—as long as pressure on the exchange rate and dollarization remains contained—could pave the way for slow-paced cuts.

“We still see a 100 basis point cut in December,” the note affirmed.

⏫ HSBC Retains 150 Basis Point Cut Prediction

HSBC reiterated its projection for a more aggressive 150 basis point rate cut at the next meeting, noting that October inflation was slightly below their estimates.

HSBC analysts maintained their end-of-year inflation forecasts for both the near and medium term:

“We are not making any changes to our 2025 and 2026 year-end inflation forecasts, which stand at 32% and 20%, respectively. We believe the Central Bank will largely evaluate the latest inflation data as supportive of the ongoing easing, and therefore, we maintain our forecast for a 150 basis point rate cut at the December 11 Monetary Policy Committee (MPC) meeting.”