Turkey: CBRT to start an easing cycle very gradually in 4Q – BBVA

As expected, on Thursday the Central Bank of the Republic of Turkey (CBRT) kept the policy rate (one-week repo) at 19%. Analysts at the BBVA Research Department expect the central bank to start an easing cycle very gradually during the fourth quarter and end the year with 17.5% policy rate.

Key Quotes: 

“The decision statement remained almost the same apart from strong 3Q activity on strengthening external demand and concerns about the food inflation linked to higher global commodity prices and climate change effects.”

“Given the CBRT communication so far, we expect the CBRT to start an easing cycle very gradually in 4Q and end the year with 17.5% policy rate. However, depending on the market volatility and potential upside surprises of inflation, the first rate cut might be delayed further.”

“Given the upside risks, we expect consumer inflation to hover near 19% till November before declining to 16% at the end of the year.”