Turkey Economics and Macro Strategy: CBT Preview: Standby Extended

Research evidence excerpt

Turkey Economics and Macro Strategy: CBT Preview: Standby Extended

Idea

June 8, 2026 04:24 PM GMT

Morgan Stanley & Co. International plc+MTurkey Economics and Macro Strategy | EEMEA Georgi Deyanov

Economist

CBT Preview: Standby Extended Georgi.Deyanov@morganstanley.comArnav Gupta +44 20 7425-7006

Strategist

Arnav.Gupta@morganstanley.com +44 20 7677-0382

Domestic demand growth weakness is likely to extend the CBT's

patience. However, risks of tighter global monetary conditions Exhibit 1 : With the disinflation process

could result in tightening ahead. In macro strategy, we continue stalling, we expect the CBT to remain on hold

to stay short 3m USD/TRY and pay 1y OIS. until 4Q26

Policy rate Headline CPI, %Y

85.5%Economics | The CBT to keep balancing between domestic demand weakness and 90 75.4% MS forecast 80

sticky inflation: Despite elevated energy commodity prices and volatility, we expect 70

the CBT to maintain its key policy rate at 37% while reiterating its tightening bias. 50

Further ahead, we expect trend inflation to ease in 4Q26, with the CBT resuming its 30 38.2%

cautious easing cycle and cutting its key policy rate by 200bp to 35%. Looking into 2010

2027, we expect the CBT to lower its key policy rate gradually to 27.50% by year- 0 2021 2022 2023 2024 2025 2026 2027

end. Risks to our forecast remain skewed to the upside, with further increases in

Source: Haver Analytics, Morgan Stanley Research forecasts

energy commodity prices or tighter global monetary conditions likely to result in

monetary tightening.

Back in April, the CBT remained on standby on indications of slowing economic

activity, while reiterating its readiness to tighten its monetary policy stance in case

of a significant and persistent deterioration in the inflation outlook. Since then, GDP