Central bank’s easing cycles running their course

Policymakers in Russia and Turkey have loosened monetary policy more than elsewhere in the emerging world over the past few months, but we think that easing cycles are nearing an end. Communications from Russia’s central bank suggest that, after one more interest rate cut in early 2020, policymakers will be in no rush to loosen policy further. In Turkey, pressure from President Erdogan to cut rates into single digits means that the easing cycle has a bit further to run – we expect another 250bp of interest rate cuts over the next couple of meetings. But the chunky 1,200bp of rate cuts delivered in recent months are now firmly behind us and with inflation likely to rise further and the lira starting to come under pressure, we think that the central bank will be forced to reverse course and start hiking rates later next year.