Barclays EEMEA Outlook: Monetary Policy Trajectory and Rate Cut Expectations

Barclays analyzes regional monetary policy and political developments across EEMEA, highlighting CBT's impending operational funding normalization in Turkey, Israel's room for monetary easing, and sharp inflation deceleration in South Africa.

Key Takeaways

• 1.The Central Bank of Turkey (CBT) signaled near-term operational normalization, likely shifting its main funding rate from 40% back to the one-week repo rate of 37% in September, followed by two 100bp rate cuts by year-end.
• 2.The Czech National Bank (CNB) is in wait-and-see mode at 3.75%, but risks remain tilted toward one additional 25bp rate hike to 4.0% in Q4 2026 due to wage and core inflation pressures.
• 3.Contained inflation and fiscal consolidation in Israel support further Bank of Israel rate cuts, with baseline expectations for 25bp cuts in November 2026 and early 2027.

Table of Contents

• Cuts after pauses
• The CBT signalled a normalisation in policy framework soon
• The CNB's minutes show a tendency towards a wait-and-see approach
• Israel inflation supports further cuts
• South Africa July inflation to decelerate sharply
• President Ramaphosa's favourability slips ahead of the 4 November local elections
• Declaration of Zambia election results not without controversy
• FIGURE 1. Inflation and policy rate forecasts
• EMERGING EUROPE, MIDDLE EAST & AFRICA DATA REVIEW & PREVIEW

Report data

FIGURE 1. Inflation and policy rate forecasts

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