Turkey Slower Loan Growth May Have Pushed Bank to Ease, EFG Says

Slowing loan growth may have contributed to the Turkish central bank’s surprise decision to resume funding at its lowest rate today, EFG Istanbul Securities chief economist Haluk Burumcekci said.

The lira weakened 1.3 percent to 1.8070 at 12:50 p.m. in Istanbul, the most this year.

“The recent outlook suggests that there is no need for further monetary tightening with regards to loan trends, and this could be one of the reasons for the central bank’s switch to normal funding conditions,” Burumcekci said in a note to clients today. “Total loans grew only 3.1 percent year-to-date, compared to 9.7 percent in the same period last year.”

Central bank governor Erdem Basci has been alternating funding rates to banks daily between a high of 11.5 percent and a low of 5.75 percent. The bank offered 4 billion liras ($2.2 billion) of funding at the lower rate today for the first time since May 3, ending the longest streak of tightening since Jan. 9.

To contact the reporter on this story: Benjamin Harvey in Istanbul at bharvey11@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net