Leading US banks expect Türkiye’s central bank to keep its key rate at 50% until November

Leading US investment banks expect the Turkish central bank to keep its key rate at 50% until at least November, but it may remain at the current level until the end of the year, Report informs referring to the Dünya newspaper, citing forecasts from Bank of America, Citibank and Morgan Stanley.

The Turkish central bank previously left the key rate unchanged at 50%, the rate has not changed for four months.

Earlier, the bank's deputy chairman Osman Akcay said that the regulator does not plan to lower the key rate, and a steady decline in inflation will be a prerequisite for its reduction.

Annual inflation in Türkiye fell sharply in a month, by almost 10 percentage points, to 61.78% at the end of July, the country's statistical administration (TUIK) reported on Monday.

Morgan Stanley said that despite the sharp decline in the July indicator, the core monthly inflation remains above the forecasts of the Central Bank of Türkiye, which is due to the continued growth of prices in the service sector. Bank of America notes that the trend of inflation growth in the service sector has not yet slowed down, food inflation has decreased mainly due to seasonal factors.