Market movers ahead: Turkish rate decision and Polish labour market data in focus
The Turkish rate decision is undoubtedly the key event next week. We don’t expect any change in the interest rate setting next week and the key borrowing rate should stay unchanged at 6.50%. We furthermore think that the Turkish central bank will stick to its dovish stance. In today’s EMEA Weekly we introduce the EMEA Monetary Policy Tracker (MPT) with focus on Turkish monetary policy outlook this week.Fixed Income Outlook: Return to monetary easing bias
As mentioned above, today we introduce the EMEA Monetary Policy Tracker (MPT), which is designed to give a signal on the direction or bias in monetary policy in the EMEA region (read more on page 4). The message from our MPT is clear - in many EMEA countries the central banks should continue their monetary easing. In fact, our MPT now points towards further monetary easing in the Czech Republic, Israel, South Africa and Turkey. That is not to say that the central banks in these countries will in fact cut rates, but we now think that there is a higher likelihood that we will see cuts rather than hikes in these countries in the coming 9-12 months. We especially stress the downside risks to rates in Israel and Turkey where the markets are still priced for hikes.We would therefore recommend being positioned for lower rates and yields in the short end of the curve in the Czech Republic, Israel, Turkey but for higher rates in Hungary. Neutral in Poland.
