Feb 20
Turkey: Aggressive cut could spark lira weakness
The Turkish central bank (TCMB) cut its key policy rate (the borrowing rate) by a whopping 150bp to 11.50% and its less important lending rate by 150bp to 14.00%. The bankÂ’s decision was more aggressive than our expectation of a 100bp cut and the consensus expectation of a 50bp cut. The borrowing rate has now been lowered by 525bp since November from 16.75% to 11.50%. Even though aggressive rate cuts can be justified on macroeconomic grounds and lower inflation, we would still argue that the
