Turkish MPC cuts rates, but monetary conditions to stay tight

Today’s 50bp cut in the Turkish one-week repo rate, to 7.75%, doesn’t necessarily mark an easing of monetary conditions. It’s much more important to look at interbank interest rates, and these have hovered near the central bank’s overnight lending rate, of 11.25%, which was left unchanged today. This suggests that the cut in the one-week rate was largely presentational – a response to government pressure to lower rates – and that monetary conditions are likely to remain tight.