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BBVA Turkey Unit Halts Interest Rate Forecasts Amid Uncertainty

BBVA Turkey Unit Halts Interest Rate Forecasts Amid Uncertainty

Turkiye Garanti Bankasi AS, a unit of Spain’s Banco Bilbao Vizcaya Argentaria SA, has stopped publishing forecasts for Turkish interest rate decisions due to policy uncertainty, according to two employees with direct knowledge of the matter.

The move came after the central bank started a surprise rate-cut cycle in September without giving clear policy guidance, the employees told Bloomberg, speaking on condition of anonymity as no decision has been announced. A spokesperson for Garanti said in an emailed statement that there was no “corporate decision” to stop participating in interest rate surveys, but the lender didn’t submit an estimate for Bloomberg’s tally in October and this month and hasn’t published a projection. 

BBVA announced on Monday that it’s seeking full control of its Turkish unit in a deal valued at as much as 25.7 billion liras ($2.56 billion), raising its bet on the country amid a slump in the nation’s currency.

Pressured by Turkish President Recep Tayyip Erdogan’s demands for lower borrowing costs, the monetary authority has cut the key rate by 300 basis points to 16% in two consecutive and unexpected moves since September. 

That pushed real yields further into negative territory as consumer inflation climbed to an annual 19.89% in October. The lira weakened more than 10% against the dollar this quarter alone, the worst among all major currencies tracked by Bloomberg. 

Turkey is expected to slash its key rate by further 100 basis points to 15% on Thursday, according to the median estimate in a Bloomberg survey of 21 analysts.

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