CBRT expected to cut rates tomorrow – BBH

In opinion of analysts at BBH, the Turkish central bank (CBRT) could lower its overnight lending rate by 25 bp at its meeting on Tuesday.

Key Quotes

“Turkey’s central bank meets Tuesday and is expected to cut the overnight lending rate 25 bp to 8.5% whilst keeping all other rates steady”.

“CPI rose 8.8% y/y in July, the highest since February and back above the 3-7% target range”.

“New Governor Cetinkaya has been very cautious in narrowing the rates corridor, and we think an outright cut in the benchmark rate will be difficult if the current upward inflation trajectory remains in place”.

“Last Friday, Fitch kept Turkey’s BBB- rating but moved the outlook to negative from stable.  We felt a downgrade to BB+ was warranted, but the negative outlook keeps that risk alive”.