18 May 2015
CBRT could refrain from cutting rates – TDS
FXStreet (Edinburgh) - Strategist Paul Fage at TD Securities expects the CBRT to keep its monetary status quo unchanged at this week’s gathering.
Key Quotes
“At Wednesday’s (20 May) MPC meeting we expect, in line with the unanimous consensus, the CBRT (Central Bank of Turkey) to keep its benchmark policy rate, the Repo Rate, on hold at 7.5%. We also expect that the Overnight Lending and Borrowing Rates will be kept on hold at 10.75% and 7.25%, respectively”.
“We have always thought that the CBRT would be reluctant to hike rates ahead of the 7 June elections, but in any case, the recent strengthening of TRY against both USD and the basket since the April MPC meeting has eased the immediate pressure for hikes”.
“On the other hand, the rise in the headline inflation rate in April, along with persistently high inflation expectations gives the CBRT no room to cut rates”.
“Notwithstanding its recent rally, we think that political uncertainty, lacklustre growth and a still large CA deficit will keep the TRY trading weak”.
“The rally in oil prices means than the main factor that has been exerting downwards pressure on Turkish inflation is no longer in play. Given the recent poor inflation performance, we think that the next move in Turkish rates will be up, possibly following the elections, or possibly in the wake of Fed tightening later this year”.
Key Quotes
“At Wednesday’s (20 May) MPC meeting we expect, in line with the unanimous consensus, the CBRT (Central Bank of Turkey) to keep its benchmark policy rate, the Repo Rate, on hold at 7.5%. We also expect that the Overnight Lending and Borrowing Rates will be kept on hold at 10.75% and 7.25%, respectively”.
“We have always thought that the CBRT would be reluctant to hike rates ahead of the 7 June elections, but in any case, the recent strengthening of TRY against both USD and the basket since the April MPC meeting has eased the immediate pressure for hikes”.
“On the other hand, the rise in the headline inflation rate in April, along with persistently high inflation expectations gives the CBRT no room to cut rates”.
“Notwithstanding its recent rally, we think that political uncertainty, lacklustre growth and a still large CA deficit will keep the TRY trading weak”.
“The rally in oil prices means than the main factor that has been exerting downwards pressure on Turkish inflation is no longer in play. Given the recent poor inflation performance, we think that the next move in Turkish rates will be up, possibly following the elections, or possibly in the wake of Fed tightening later this year”.