CBRT could cut 25 bp its O/N rate today – TDS

In view of strategists at TD Securities, the Turkish central bank could lower its O/N rate by 25 bp at today’s meeting.

Key Quotes

“In EMs, we are still observing and reassessing the fallout of the failed coup in Turkey on Friday, 15 July. This has been one of the most dramatic days in the country’s recent history. The government has returned in full control of the country in a matter of hours and thousands of arrests have followed. Markets were quick to react in both directions. After selling off almost 5% on Friday, TRY recovered 1.5% yesterday, but has weakened throughout the trading session after a very strong start”.

“We think the CBRT will decide to cut the O/N lending rate only by 25bps to 8.50% instead of -50bps we would have otherwise expected, the most likely outcome. This should support the TRY rebound for now, but a deeper cut would quickly remove lira support”.