Turkish bank has little room for manoeuvre

A combination of slowing inflation and disappointing Q1 GDP data has led to speculation that the Central Bank of Turkey (CBRT) might start to loosen monetary policy. We are sceptical. With the current account deficit still around 9% of GDP, downside risks to the lira rule out a significant loosening of policy for now and suggest that the recent rally in the bond market is unlikely to be sustained.

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