The accompanying statement to today’s Turkish MPC meeting, at which interest rates were left unchanged, once again suggested that the Council remains concerned about the poor inflation outlook. This is likely to dash hopes that have been growing in the markets that interest rates will be cut soon. For our part, however, we think the MPC’s view is justified. While lower oil prices will ease inflation and current account concerns, vulnerabilities remain. For now, we don’t envisage any reductions in official interest rates over our forecast horizon.
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