11 May 2005 -

Report Summary

We were not expecting a rate cut from CBRT in May due to the inflation related technical reasons and behavior of CBRT in the past. However we also mentioned that current account problems may force the CBRT to change its behavior and so cut the rates off. We think that despite the negative impacts on inflation and interest rates, rate cuts are supposed to have positive impacts on domestic demand and the ISE. In fact this idea is theoretical. In practice, external conditions are still opposed to emerging markets. Beside that referendum on May 29 is expected to significantly effect the Turkey’s overview in the eyes of foreigners.

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