ANKARA: A top Turkish central bank official is telling bankers that the pace of interest-rate cuts will be based on the course of inflation, pushing back against market expectations for sizeable, consecutive reductions, according to people familiar with the matter.
Central bank deputy governor Cevdet Akcay said earlier this week that the decisions would be taken meeting-by-meeting, people familiar with the discussions said, asking not to be named because the meetings were private.
Some of the people said that he was cautioning against market pricing that implies a more aggressive cutting cycle.
The central bank declined to comment.Markets and economists alike have been forecasting sizeable interest-rate cuts in all of the eight policy meetings scheduled this year.
The median forecast in a Bloomberg survey sees the year-end policy rate dropping to 30%, while markets price it at around 31.8%, compared with 47.5% now.
Barclays Plc and Turkiye Ekonomi Bankasi AS economists both said last month that they see 250 basis point (bps) reductions in each of the meetings this year.
The yields on two-and five-year lira notes have declined by about three percentage points since mid-December as analysts adjusted their interest-rate forecasts downward and after better-than-expected inflation figures reported at year-end. — Bloomberg
