Macroeconomic Forecast Turkey

October 2007 | Macroeconomic Forecasts

In line with the larger than expected 50bps cut to the overnight borrowing rate in October, we have revised downward our end-year interest rate forecast to 16.25%, from an original forecast of 16.75%. In spite of the Central Bank of Turkey 's (CBT) dovish policy stance thus far in the third and fourth quarters, we expect that further rate cuts in the last two months of the year will be moderated by caution over lingering concerns about food and energy price inflation. Indeed, comments by CBT governor Durmus Yilmaz that rates should not come down too rapidly nor that they will be continual over the medium term have contributed to our decision to leave our end-2008 rate forecast at 13.75%.

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