HSBC Expects Central Bank to Cut Rates to 30% by End of 2025

Forex - HSBC expects that the Central Bank of the Republic of Turkey (CBRT) will reduce interest rates from 50% to 30% by the end of 2025. The bank noted that under this scenario, the significant maturity mismatches of Turkish banks and the high share of long-term deposits in total deposits will lead to considerable net interest income tailwinds.

In its recent note, the bank stated that it expects the CBRT's nearly 2% loan growth limit imposed on most loan categories to restrict currency-linked loan growth to 24% in 2025. HSBC also emphasized that monetary tightening is causing GDP to contract consecutively in the second and third quarters of 2024.