EM Daily:Eyes on CBTB,old or Cautious

　　Turkey (CBT Preview): Bold or cautious?

　　Despite a less supportive global backdrop and recent sell-off in TRY assets, we expect the O/N lending rate to be cut by another 50bps (to 9.5%) today on the back of an uninterrupted disinflation trend, higher ex-post real policy rates, resilient lira in REER terms, and rising political externality. Risks are tilted to the upside, i.e. a smaller (25bps) cut, assuming new Governor Cetinkaya proceeds with some caution against recent Fed re-pricing. Eyes are also on the new cabinet and whether Deputy PM Simsek will retain his post or not. We could have a formal announcement today. Local news outlets Hurriyet and BusinessHT over the weekend mentioned that he could be replaced by Nurettin Canikli (former Trade and Customs Minister) or Nihat Zeybekci (former Economy Minister) while Energy Minister Berat Albayrak is expected to remain in his post. A cabinet without Simsek could raise eyebrows further among international investors and potentially have a subsequent impact on the outcome of the CBT meeting. Separately, we still believe a reduction in the lower band should take place in the months ahead if the Bank is sincere about corridor simplification. Also see Data Flash - Turkey (CBT Preview): Bold or

　　Cautious?