CBRT to stay on hold in March; timing of expected cut is key - Standard Chartered

"We expect the Central Bank of the Republic of Turkey (CBRT) to keep its policy rate – the weekly repo rate – unchanged at 24.0% at its 6 March Monetary Policy Committee (MPC) meeting," argues Standard Chartered economist Carla Slim.

Key quotes

"A more benign global backdrop, with the Fed signalling patience in tightening monetary policy, will give Turkey room to give greater weight to domestic factors – such as the business cycle – instead of global developments, in monetary policy decisions."

"We think the CBRT will look to cut rates in 2019, likely around the July MPC meeting, contingent on conducive conditions which could include: (1) a sustained drop in inflation supported by relative TRY stability, cooling food inflation and base effects in H2; (2) a sustained improvement in the current account balance, which posted surpluses from August until November, then swung back into deficit in December; and (3) a sustained improvement in the financial account, which only returned to a surplus in November on the return of portfolio inflows to debt securities."