Turkey: 425bps cut delivered by CBRT - TDS

Cristian Maggio, head of emerging markets strategy at TD Securities, notes that the CBRT's MPC has today cut interest rates by 425bps.

Key Quotes

“The direction was widely anticipated by us and the market, though the magnitude was difficult to accurately forecast. We had anticipated a 350bps cut in the repo rate and a downside adjustment of the whole corridor, but the CBRT delivered an additional 75bps of easing.”

“At the time of writing, the sole measure announced by the CBRT today is that the benchmark repo rate has been lowered to 19.75%. While we believe the rates corridor will also need to be adjusted lower, we have seen no communication on it just as yet.”

“Measures of quantitative easing, such as RRR and ROC cuts, have not been announced, but could follow in the coming hours or days. Should these measures follow in a separate announcement, as they are meant to release additional liquidity in the banking system, they ought to be considered a form of monetary easing, albeit through different means, in conjunction with today's rate cut.”