LONDON (Reuters) – A more hawkish tone from Turkey’s central bank at Thursday’s policy meeting means it will now likely deliver a first cut in interest rates in the third quarter rather than the second and trim less overall, JPMorgan said in a research note.
“The emphasis on tight policies for an extended period of time suggests that the CBRT (central bank) is still not confident on the disinflation process and is determined to build further credibility,” JPMorgan’s Yarkin Cebeci said in a note to clients, predicting a cut for July.
“The CBRT would also want to see some sustained de-dollarization by local investors before starting the easing cycle.”
Cebeci predicted policy makers would deliver 400 basis points of cumulative rate cuts, down from 500 bps.
Turkey’s central bank held rates at 17% as expected on Thursday.
(Reporting by Karin Strohecker; Editing by Rachel Armstrong)