CBRT expected to cut rates further – TDS

Strategists at TD Securities see the Turkish central bank to cut its rate further at today’s meeting.

Key Quotes

“We expect a 25-50bps cut of just the O/N Lending Rate that should leave USDTRY roughly neutral or modestly skewed towards weakness. A cut in excess of 50bps would be met by lira weakness, while a hold is likely to be TRY positive”.

“The long-end of the TURKGB curve should continue to feel the pressure of inflation and idiosyncratic risks, while the front-end is held anchored by the CBRT”.

“Political uncertainty is sharply on the rise, with former Transport Minister Yildirim appointed as the new AKP head and PM-designate. The new cabinet is likely to be announced tomorrow or later this week. Deputy-PM Simsek is likely to be replace by Energy Min Albayrak”.