ISTANBUL: The Turkish lira held steady on Thursday as investors waited to see how sharply the central bank would cut int
ISTANBUL: The Turkish lira held steady on Thursday as investors waited to see how sharply the central bank would cut interest rates, after the government abruptly sacked the bank's chief in a push for easier policy and relief for Turkey's recession-hit economy.
At 0900 GMT, the lira stood at 5.7115 against the dollar, little changed from Wednesday's close of 5.7110.
The central bank's benchmark rate has been set at 24pc since September, which was in the depths of Turkey's currency crisis that last year knocked nearly 30pc off the value of the lira. The emerging market currency is down another 8pc this year.
A Reuters poll of 23 economists showed a median expectation of a 250-basis-point rate cut, with predictions ranging between cuts of 100 to 500 points in the one-week repo.
The central bank will announce its rate decision at 2 pm (1100 GMT).
The consumer price index fell to 15.72pc year-on-year in June, off a 15-year-high above 25pc in October, opening the door to begin easing Turkey's monetary policy for the first time in more than four years.
The currency crisis was halted in part by aggressive rate hikes last year, though the economy tipped into recession.
Concerns over the central bank's independence from political pressure helped set off last year's crisis, and its credibility has come under new scrutiny by investors after its governor was unexpectedly fired less than three weeks ago.
The bank's new governor, former deputy Murat Uysal, took the reins after Turkish President Tayyip Erdogan fired Murat Cetinkaya because as Erdogan said he failed to follow the government instructions on monetary policy.
In the rate-setting meeting, Uysal faces the challenge of protecting the lira while satisfying Erdogan, said Piotr Matys, an EM FX Strategist at Rabobank. He expects a "relatively modest" 200-point cut.
A significant rate cut "would reignite FX volatility at a time when Turkey still requires a stable lira to support the disinflation process, restore confidence amongst households and corporates and slow down the dollarization of the Turkish economy," Matys said in a note.
Turkey's capacity utilisation declined in July to 76.2pc though it remained above a nearly four-year low of 74pc in February.
Manufacturing confidence also fell towards a pessimistic area in July compared to a month earlier.
The main BIST 100 index as well as the banking index traded flat ahead of the central bank meeting.