Turkish cenbank holds rates, sees disinflation strengthening
Adds MPC comment on disinflation
By Ezgi Erkoyun and Ece Toksabay
ISTANBUL, July 23 (Reuters) -Turkey's central bank held its policy rate steady at 50% on Tuesday as expected and repeated it remains highly attentive to inflation risks, even as it expects disinflation to gain strength after a welcome turnaround last month.
The central bank last raised interest rates in March, by 500 basis points, and has since held steady while vowing to tighten policy more if it predicts the inflation outlook will worsen, a hawkish pledge it repeated on Tuesday.
Most analysts expect rate cuts to begin before year end, though some expect the central bank will wait longer.
Starting to see results from a year-long tightening drive, the bank said the underlying monthly inflation trend showed a notable decline in June, though added that it could rise "temporarily" this month due to one-off factors.
"The decisiveness regarding tight monetary stance will bring down the underlying trend of monthly inflation through moderation in domestic demand, real appreciation in Turkish lira, and improvement in inflation expectations," its monetary policy committee said.
"As a result, the disinflation process will gain strength."
Since June last year, the bank has raised its policy rate TRINT=ECI by a total 4,150 basis points in a tightening cycle that reversed years of monetary stimulus supported by President Tayyip Erdogan to boost economic growth.
Turkey's annual inflation rate began what is expected to be a sustained fall in June, dipping to 71.6%. Officials and analysts predict a gradual decline in the remainder of 2024 with economists forecasting a year-end level of around 43%.
"Leading indicators suggest that monthly inflation will rise temporarily in July due to adjustments in administered prices and taxes as well as supply-side factors in unprocessed food prices," the bank said.
In a Reuters poll last week, all 26 economists expected the central bank to hold rates this month and not to ease until the next quarter. The policy rate was expected to drop by 500 basis points to 45% by the end of 2024.
No significant easing in rates was expected to come until next year, the poll showed, with the central bank forecast to reduce rates by 2,250 basis points to 27.50% by end-2025.
S&P Global Market Intelligence said in a note that it expects "a cautious cutting cycle" to begin in December.
Many Turks are struggling with eroding living standards after six years of soaring inflation, combined with a sharp clampdown on credit over the last year, which has left them paying the price for past economic missteps.
Before he backed last year's policy reversal, Erdogan had championed a low rates policy for five years to lift economic growth despite soaring prices, which led to the lira shedding more than 85% to the dollar since 2018.
The lira TRYTOM=D3 was little changed at 32.9450 against the dollar after the rates decision.
The central bank added that the monetary transmission mechanism will continue to be supported via additional macroprudential measures, while sterilization will be implemented effectively by adding to the tool set whenever needed.
Reporting by Ezgi Erkoyun and Ece Toksabay;
Writing by Daren Butler;
Editing by Jonathan Spicer
Activos relacionados
Últimas noticias
Descargo de responsabilidades: Cada una de las entidades de XM Group proporciona un servicio de solo ejecución y acceso a nuestra plataforma de trading online, permitiendo a una persona ver o usar el contenido disponible en o a través del sitio web, sin intención de cambiarlo ni ampliarlo. Dicho acceso y uso están sujetos en todo momento a: (i) Términos y Condiciones; (ii) Advertencias de riesgo; y (iii) Descargo completo de responsabilidades. Por lo tanto, dicho contenido se proporciona exclusivamente como información general. En particular, por favor tenga en cuenta que, los contenidos de nuestra plataforma de trading online no son ni solicitud ni una oferta para entrar a realizar transacciones en los mercados financieros. Operar en cualquier mercado financiero implica un nivel de riesgo significativo para su capital.
Todo el material publicado en nuestra plataforma de trading online tiene únicamente fines educativos/informativos y no contiene –y no debe considerarse que contenga– asesoramiento ni recomendaciones financieras, tributarias o de inversión, ni un registro de nuestros precios de trading, ni una oferta ni solicitud de transacción con instrumentos financieros ni promociones financieras no solicitadas.
Cualquier contenido de terceros, así como el contenido preparado por XM, como por ejemplo opiniones, noticias, investigaciones, análisis, precios, otras informaciones o enlaces a sitios de terceros que figuran en este sitio web se proporcionan “tal cual”, como comentarios generales del mercado y no constituyen un asesoramiento en materia de inversión. En la medida en que cualquier contenido se interprete como investigación de inversión, usted debe tener en cuenta y aceptar que dicho contenido no fue concebido ni elaborado de acuerdo con los requisitos legales diseñados para promover la independencia en materia de investigación de inversiones y, por tanto, se considera como una comunicación comercial en virtud de las leyes y regulaciones pertinentes. Por favor, asegúrese de haber leído y comprendido nuestro Aviso sobre investigación de inversión no independiente y advertencia de riesgo en relación con la información anterior, al que se puede acceder aquí.
