Blurry rate outlook

William Jackson, senior emerging-market economist, Capital Economics

Dunya Executive - - REPORT -

Investors seem to have initially welcomed the certainty resulting from the vote, yet their enthusiasm has been tempered by concerns about the longer-term impact of the erosion of checks and balances within the political system. It’s not clear to us that the Central Bank would go as far as cutting its official interest rates at one of the next few meetings. After all, it raised one of its policy rates as recently as March and inflation is currently more than twice its target. However, the Central Bank could adjust the amount of liquidity provided via its various facilities to reduce the average cost of funding for banks within the interest-rate corridor. The longer the lira remains steady, the more likely monetary easing becomes. (April 18)

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