Economists are split on whether Turkish monetary policy is looser or tighter after central bank Governor Erdem Basci cut one of his three interest rates while saying he’d use an experimental tool to manage liquidity.
The biggest drop in Turkish bond yields in more than three weeks is signaling investors see the central bank gearing up for interest-rate cuts, with economists debating when, not whether, they will occur.
Latvia’s economy expanded on an annual basis for the first time since the Baltic state was engulfed by the global financial crisis more than two years ago as the European Union’s toughest austerity measures pay off.
When Turkish Central Bank Governor Durmus Yilmaz drove interest rates to a historic low last November, economists said he might keep them there for half a year. Seven months later, there’s no sign he plans to budge from the current 7 percent.
Foreign demand for real assets may provide some relief for Turkey as it seeks to narrow the second- largest current-account deficit in developing nations amid a graft probe that is sucking cash from financial markets.
The worst start to a year for the Turkish loan market since 2009 is starting to ease as one of the nation’s largest syndicated deals signals confidence in an economy at risk from a graft probe embroiling the government.