Turkey: Market participants anticipate a 50 bps cut – Wells Fargo

On Thursday, the central bank of Turkey will have its monetary policy meeting. Market participants expect a 50 basis point rate cut according to analysts at Wells Fargo. 

Key Quotes: 

“Turkey’s central bank cut rates further at its December policy meeting, opting to reduce its one-week repo rate 200 bps to 12.00%. The decision to ease monetary policy amid increasing price pressures and underwhelming growth performance, reinforces our view of a lack of central bank independence in Turkey. In addition, President Erdogan announced that the monetary policy committee will meet 12 times this year (versus eight times in 2019) and suggested interest rates will reach single digits in 2020, indicating that political pressure on the central bank has not yet eased.”

“CPI inflation pushed higher to 11.84% year-over-year in December, the second straight monthly increase. The latest increase narrowed the real interest rate to 16 bps. Currently, market participants anticipate a 50 bps cut to 11.50% at the policy meeting.”