Loans Replace Inflation In Top Forecaster’s Turkey Rate Calls
The leading forecaster of Turkish central bank moves said another rate cut is possible this month as muted growth in commercial loans may eclipse rising inflation as the primary driver of monetary policy.
“The benchmark interest rate has cut all ties not just with headline inflation, but with all kinds of inflation,” Ibrahim Aksoy, Istanbul-based chief economist at HSBC Asset Management Turkey, said on Twitter Monday. “I think the central bank may continue cutting rates at the Oct. 21 meeting due to the bank’s emphasis on tightening effects in commercial loans.”
Commercial loan growth adjusted for the exchange rate has been under 10% for much of this year, significantly lower than expansion in consumer loans, according to data published by the central bank.
In a statement accompanying last month’s decision to lower the benchmark by 100 basis points to 18%, the bank said tightness in monetary policy “has started to have a higher than envisaged contractionary effect on commercial loans.”
Aksoy ranks first among forecasters of Turkish rate decisions in two years of Bloomberg surveys. He was the only forecaster among 23 to correctly predict a cut at September’s meeting.
Consumer inflation accelerated for a fourth month in September, with prices rising an annual 19.58%, up from 19.25% in August.
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