EM space: central banks in the limelight - BBH

Analysts at BBH expects the Turkish central bank to lower its lending rate by extra 25 bp at its meeting later in the week, while its Hungarian peer is seen keeping its stance unchanged.

Key Quotes

“Turkish central bank meets Thursday and is expected to cut the overnight lending rate 25 bp to 8.25%. No change in the 7.5% benchmark rate is expected”.

“CPI rose 8.1% y/y in August, above the 3-7% target range. However, the economy remains sluggish and so the bank will likely be under pressure to ease more aggressively”.

“Hungarian central bank meets Tuesday and is expected to keep rates steady at 0.90%”.

“CPI came in at -0.1% y/y in August, even as July real sector data (retail sales, IP, etc) have come in much weaker than expected”.

“While the central bank feel that it has completed the rate cut cycle, we think some further unconventional measures are possible if the data continue to come in weak”.