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20 Nov 2014
CBRT to keep rates on hold – TD Securities
FXStreet (Barcelona) - According to the Analysts at TD Securities, the Turkish Central Bank (CBRT) will keep all its policy rates on hold as the above target inflation leaves little room for the CBRT to cut rates.
Key Quotes
“In its statement accompanying the October rate decision, the CBRT said that macroprudential measures taken at the start of this year and the tight monetary policy continue to have a positive effect on core inflation.”
“The CBRT states that the tight monetary stance will be maintained, by keeping a flat yield curve, until there is a significant improvement in the inflation outlook.”
“One can reasonably question the CBRT’s assertion that monetary policy is tight, particularly given their target of 5%. After all, the repo rate at 8.25% remains below the headline CPI rate of 8.96%.”
“We do think that the next move in rates will be down and that inflation will have fallen far enough by Q1 of next year for the CBRT to feel justified in cutting its policy rate moderately, by about 50 bp."
Key Quotes
“In its statement accompanying the October rate decision, the CBRT said that macroprudential measures taken at the start of this year and the tight monetary policy continue to have a positive effect on core inflation.”
“The CBRT states that the tight monetary stance will be maintained, by keeping a flat yield curve, until there is a significant improvement in the inflation outlook.”
“One can reasonably question the CBRT’s assertion that monetary policy is tight, particularly given their target of 5%. After all, the repo rate at 8.25% remains below the headline CPI rate of 8.96%.”
“We do think that the next move in rates will be down and that inflation will have fallen far enough by Q1 of next year for the CBRT to feel justified in cutting its policy rate moderately, by about 50 bp."