TRY: CBRT to keep all its rates on hold - TDS

Research Team at TDS, expects the CBRT to keep all its rates on hold at today’s MPC meeting.

Key Quotes

“In particular we expect the O/N Lending Rate to be held at 8.25%, which would be the first time since February that the CBRT has not cut this rate. The recent weakness of the lira argues against easing, but, given the political pressure for lower rates, there seemed to be a good chance that the CBRT would cut anyway, pointing to the sharp fall in CPI inflation to 7.28% Y/Y in September as justification . However, yesterday’s comment from President Erdogan’s Chief Advisor Bulut that “if the central bank needs to pass this month, the  central bank would pass this month” gives the CBRT the political nod to keep rates on hold.

The Bloomberg consensus is strongly in favour of the CBRT cutting the O/N lending Rate by 25 bps, but most of the forecasts in the survey predate Bulut’s comment. We expect the CBRT to resume interest rate cuts at a later stage when conditions become favourable again.”