ING’s Frantisek Taborsky expects the Central Bank of the Republic of Türkiye (CBRT) to keep its policy rate at 37% for now, after normalising liquidity and lowering the effective funding rate. Weaker 2Q Gross Domestic Product (GDP) and gradual disinflation should allow two 100bp cuts to 35% in Q4, with markets already pricing a dovish path into year-end. ING sees continued disinflation driving further repricing and maintains forecasts of USD/TRY at 52 by year-end and 63 by end‑2027.

CBRT on hold before gradual cuts

“We expect the CBRT to keep rates unchanged at 37% today. It is too early to resume easing after the bank restarted weekly repo auctions and brought the effective funding rate down from 40% to the policy rate.”

“Still, weaker-than-expected 2Q GDP and a continued gradual decline in inflation should allow two 100bp cuts to 35% in Q4.”

“As liquidity conditions have normalised, market pricing has turned more dovish and moved closer to our year-end forecast. The CBRT rate is now priced at 34.50% by year-end.”

“However, markets remain sceptical about the scope for easing next year, pricing only around 100bp of cuts. Continued disinflation could drive further dovish repricing in this part of the curve.”

“The FX outlook is broadly unchanged. Long TRY positioning has already returned to pre-US-Iran conflict levels, despite the CBRT’s dovish August stance and the prospect of renewed easing. At the same time, the continued recovery in central bank FX reserves should support investor demand for the TRY carry trade. We forecast USD/TRY at 52 by year-end and 63 by the end of next year.”