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Turkey delivers 250bps rate cut
US stock futures traded flat in holiday-thinned markets as Asian shares gained. Turkey cut rates sharply, citing moderating inflation, while Russia dismissed a ceasefire in Ukraine but left room for negotiations.
Holiday closures in Australia and Hong Kong reduced market activity globally.
Turkey’s central bank cut rates by 250bps.
Russia rejected Trump’s ceasefire call but expressed openness to peace talks in Ukraine.
US stock futures traded in a narrow range Thursday as most Asian markets gained, buoyed by Japan and Taiwan. The Nikkei 225 climbed 1.1%, supported by Bank of Japan (BOJ) Governor Kazuo Ueda’s cautious approach to potential interest rate hikes. The yen saw modest weakness, with USD/JPY advancing to 157.66.
Trading volumes were subdued due to holiday closures in Australia and Hong Kong, with major European markets also remaining shut. In the US, markets were set to operate as normal, albeit with light participation. Currency markets showed minimal movement, with EUR/USD at 1.10395 and GBP/USD at 1.2516.
Turkey makes bold move with rate cut
The Central Bank of Turkey surprised markets with a 250bps cut to its one-week repo rate, lowering it to 47.5%. This marked a sharp pivot from its restrictive monetary policy stance that had kept borrowing costs elevated for nine months. The cut defied analysts' expectations of a 150bps reduction, as policymakers cited continued disinflationary trends and a moderation in services inflation.
Inflation in Turkey has eased to a 17-month low of 47.09%, but its pace of decline has recently slowed. The central bank emphasized its intention to enhance fiscal and monetary policy coordination to maintain a restrictive backdrop while allowing for adjustments to support economic activity.
Russia pushes back on Ukraine ceasefire, signals openness to talks
Geopolitical tensions remained high as Russia rejected incoming US President Donald Trump’s call for an immediate ceasefire in Ukraine, stating that such a move would only benefit Kyiv’s military buildup. Foreign Minister Sergei Lavrov underscored Moscow’s insistence on legally binding agreements to ensure Russia’s security and its neighbors’ legitimate interests.
While Russia’s forces continue to gain ground, Ukrainian President Volodymyr Zelenskiy has softened his rhetoric, indicating a willingness to use diplomatic channels to recover territory. However, Moscow’s demands, including Ukraine renouncing its NATO aspirations and limiting its military size, remain sticking points. Lavrov expressed hope that the Trump administration would address the conflict’s root causes, signaling Russia’s readiness to consider “serious, concrete proposals.”
