Turkey cenbank likely to do 'irrational' 100-pt rate cut: SocGen

Turkey's central bank would likely cut its key rate by another 100 basis points on Thursday

  

ISTANBUL- Turkey's central bank would likely cut its key rate by another 100 basis points on Thursday, after surprising markets with an equal easing last month, pushing the lira to a record low 9.8 versus the dollar by year end, Societe Generale said on Tuesday.

After Erdogan fired three members of the bank's monetary policy committee (MPC) last week - including two hawks - he "has effectively removed all opposition to his unorthodox view that high interest rates cause high inflation," SocGen analysts wrote in a client note.

Despite the "irrationality" of further rate cuts now, "there is no longer any point to ascribing traditional economic arguments in considering the (central bank's) likely course of action," they wrote.

(Reporting by Jonathan Spicer; Editing by Dominic Evans) ((jonathan.spicer@reuters.com; Reuters Messaging: jonathan.spicer.thomsonreuters.com@reuters.net @jonathanspicer))


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