Morgan Stanley Warns: Rising Energy Prices and Geopolitical Tensions May Affect Interest Rate Cuts in Turkey

Morgan Stanley's new report highlights that rising energy prices and increasing geopolitical tensions could complicate Turkey's fight against inflation. The Turkish economy may be negatively impacted by tensions in the Middle East and energy price volatility. This situation could lead the Central Bank of the Republic of Turkey (TCMB) to postpone interest rate cuts and potentially create a need for new monetary tightening. According to the bank's analysis, increasing cost pressures could delay the start of the interest rate cut cycle. Rising energy prices, pressure on the exchange rate, weakening global risk appetite, or stronger-than-expected domestic demand could not only delay the first interest rate cut but also potentially create a need for new monetary tightening. Economists, sharing their assessments ahead of the Monetary Policy Committee (MPC) meeting on Thursday, emphasized that certain conditions must be met for interest rate cuts to be more aggressive or start earlier. If the monthly inflation trend accelerates downward, exchange rates stabilize, and economic growth slows down more noticeably, the TCMB's hand will be strengthened, and a deeper easing cycle will be supported.