Fourteen of 17 poll respondents forecast that the bank would cut its policy rate next Thursday, according to the poll. Three respondents expect the central bank to keep rates on hold until the first quarter.
While most expected that the easing cycle will be launched this month, economists differed over the size of the first cut.
Five economists expect the first rate cut to be 150 basis points from the current 50% on the back of a slower-than-expected improvement in inflation, while five others see a 250 basis point easing next week.
Two institutions expected the policy rate to be cut by 100 basis points while two forecast an easing of 200 basis points next week, according to the poll.
To tackle inflation that has soared for years, the central bank has raised its policy rate by 4,150 basis points in total since mid-2023, reversing a previous low-rates policy championed by President Tayyip Erdogan to boost economic growth.
As inflation started to decline, the central bank is expected to cut the policy rate by 2,150 basis points by the end of next year to 28.5%, according to the poll median.
Forecasts ranged between 25% and 33%, in the poll. The central bank expects inflation to fall to 21% by the end of 2025.
Citi said in a recent research note that an expected normalisation in unprocessed food prices and the central bank’s latest communication suggest the easing cycle could start at the final meeting of the year.
“The combination of growing evidence of an economic slowdown and historically tight financial conditions faced by bank dependent borrowers also lends support to our view that a 250bp cut in December is likely. However, we concur that a less aggressive easing cannot be entirely ruled out.”
November inflation was higher than expected at 47.09% annually while monthly, it rose 2.24% on the back of unprocessed food prices. The central bank is monitoring monthly inflation closely as it decides when to cut its main interest rate.
The central bank has said that the developments in food prices are outside the scope of the monetary policy. Separately, Governor Fatih Karahan said that although inflation is shifting slower than expected, the main trend continues to improve.
Expectations the rate cutting-cycle would begin in December were heightened after the central bank revised its inflation forecasts in November, with Governor Karahan’s remarks over maintaining monetary tightness as inflation declines.
The central bank will announce its next interest rate decision on December 26.
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