LONDON (Reuters) – Barclays said on Monday it expected Turkey’s central bank to keep interest rates stable at 19% until October and then cut 350 basis points to 15.5% in the last quarter following Friday’s ouster of central bank chief Naci Agbal.
“It is possible to say that (new central bank governor Sahap Kavcioglu) is not an advocate of tight monetary policy,” said Ercan Erguzel, an economist at Barclays.
“That being said, the likely return of volatility may not
provide the new governor an opportunity to deliver an imminent rate cut, in our view,” he said, adding there was little evidence to revise estimates at this stage.
The lira tanked to near its all-time low after President Tayyip Erdogan’s shock weekend decision to oust a hawkish central bank governor sparked fears of a reversal of recent rate hikes and undermined the bank’s credibility.