ISTANBUL: Turkish benchmark bond yields hit fresh record lows on Monday as investors prepared for a central bank news conference on Tuesday when the bank could signal it is ready to ease monetary policy further.
The central bank is due to release its quarterly Inflation Report on Tuesday and the market expects it will keep its year-end inflation forecast at 5.3 percent but maintain its bias towards a rate cut.
"We expect the central bank to signal continued measured rate cuts," Garanti Securities economist Gizem Oztok Altinsac said in a note on Monday.
Turkey's two-year benchmark bond yield fell to a record low 5.26 percent in thin volume, from 5.38 percent late on Friday. It last traded at 5.27 percent at 1000 GMT.
Turkish debt has been supported by expectations that a second ratings agency will soon raise Turkey to investment grade, which would allow more international funds to invest in Turkish assets.
Traders said an expected interest rate cut by the European Central Bank at a meeting on Thursday would also support Turkish debt as it would accelerate global investors' hunt for higher yielding assets.
Turkey has a single investment grade credit rating from Fitch.
The Turkish central bank will release year-end inflation forecasts on Tuesday and Governor Erdem Basci is due to hold a news conference.
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