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Middle East

Turkey cenbank could do 'one off' rate cut in December -Soc Gen

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A logo of Turkey's Central Bank (TCMB) is pictured at the entrance of the bank's headquarters in Ankara, Turkey April 19, 2015. REUTERS/Umit Bektas//File Photo

ISTANBUL, July 16 (Reuters) - Turkey's central bank could do a "one off" interest rate cut of about 100 basis points in December to take advantage of an expected inflation dip in November, as long as global financial markets clear the way, bank Societe Generale said in a note.

A drop in headline consumer prices "may tempt the central bank to consider a one-off rate cut at the December MPC meeting ... conditionally subject to a still-accommodative external environment at that time," analyst Phoenix Kalen wrote in a client note.

"However, rate cuts run against the grain of broader rates normalization globally, and may need to be subsequently reversed if they invite marked further TRY weakness."

Recently steady monetary policy "in the face of political pressure" has raised investor confidence in the Turkish lira, she added. "Some recovery of foreign tourism over the summer months may help to boost domestic FX liquidity, shielding (the lira) from pronounced weakness."

Reporting by Jonathan Spicer; Editing by Dominic Evans

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