Economists expect Turkey’s central bank will announce a deeper rate cut - Reuters
A Reuters poll on Friday showed that Turkey’s central bank is expected to lower its benchmark rate by 250 basis points from its current 24 percent on its July 25 meeting, which will be the first monetary board meeting of the institution after the appointment of a new governor, Murat Uysal.
Reuters said that the new governor’s “dovish comments” encouraged expectations of a significant reduction. Uysal said this week that there was a distinction between instrument independence and goal independence, when explaining in an interview with the state-run Anadolu news agency his opinions on the central bank’s independence.
The central bank has kept the benchmark lending rate on hold at 24 percent since September, when it hiked it by 625 basis points to prevent a slump in the lira from turning into a full-blown financial crisis.
Inflation in Turkey increased to a 15-year-high above 25 percent in October and fell to 15.72 percent year-on-year in June, prompting expectations for a rate cut in July 25 meeting.
Those expectations later strengthened after the Turkish President Recep Tayyip Erdoğan sacked the central bank’s former governor Murat Çetinkaya early this month for failing to lower interest rates over recent months. The median forecast for an expected rate cut was 200 basis points in a previous Reuters poll conducted last week.
A new poll with 23 institutions shows a median forecast of a 250 basis point rate cut in the policy rate at this month’s meeting, with forecasts ranging between cuts of 100 basis points and 500 basis points in the one-week repo rate, Reuters said.
The median estimate in the poll for the central bank’s year-end policy rate was 18 percent, down from a forecast of 20 percent in last week’s poll, Reuters said. The latest forecasts ranged between 15 percent and 20 percent.