BBVA Sees Faster Lira Depreciation as Rate-Cut Bets Build
The bank says easing inflation and fund-market turmoil strengthen the case for a rate cut at the October 22 meeting.
Key takeaways
- BBVA says the central bank may allow the lira to depreciate faster in nominal terms.
- The bank says September inflation below 30% and fund-market turmoil strengthen the case for a rate cut.
BBVA says Türkiye’s central bank may allow the lira to depreciate faster in nominal terms. The bank says a more gradual but quicker currency rise could reduce the risk of a sharper adjustment later.
The bank said recent turbulence in the fund market weakened confidence and tightened liquidity for some companies, adding to pressure for looser monetary policy.
BBVA also cited September annual inflation falling below 30% as strengthening the case for a rate cut. It said expectations of a cut have grown ahead of the central bank’s October 22 policy meeting.
The bank said a possible currency-policy adjustment would not change the basic framework of carry trades based on investment in high-interest Turkish lira assets.
This article was produced with the help of AI technology. Based on reporting by the outlets listed above.
