Turkey: CBRT to start an easing cycle - ING

Petr Krpata, chief EMEA FX and IR strategist at ING, points out that their economists expect the Central Bank of Turkey to start an easing cycle today and to deliver a 200bp rate cut, given improvements in inflation and the new CBT governor’s remarks on 15 July.

Key Quotes

“Given increasing concerns about credibility (with the appointment of the new governor), the risks are to the downside. Looking beyond today’s meeting, the CBT’s remarks on economic activity and inflation along with an emphasis on “a reasonable rate of real return”, the bank is signalling deeper cuts until the end of the year.”

“The Turkish lira's reaction will depend on whether the CBT under/over-delivers vs market expectations (with currently 350bp of cuts priced in for today).”