Goldman Sachs expects Thursday’s rate hike in Turkey to be the last in the current tightening cycle, setting it apart from other banks that believe monetary tightening is not yet complete, Bloomberg reported.
Interest rates will not rise higher than the current 42.5 percent unless there is an inflation surprise, Bloomberg cited analysts Clemens Grafe and Başak Edizgil as writing in a Dec. 21 report. Borrowing costs will fall again after the third quarter and drop to 25 percent by the end of the year, they say.
Morgan Stanley, Deutsche Bank AG and Bank of America Securities — which also released reports following this week’s 250 basis point rate hike — all expect a final hike of a similar magnitude in January as policymakers try to fend off inflation, which analysts expect to accelerate to 70 percent in the coming months.
Bank of America expects the first rate cut towards the end of 2024, assuming inflation approaches the central bank’s year-end forecast of 36 percent. Deutsche Bank does not rule out the possibility that interest rates could be cut as early as the third quarter.