Ahead of today's rate decision, analysts.....>

TURKEY: Ahead of today's rate decision, analysts at TDS expect the CBRT to

further tighten monetary policy by 100bps and in particular, they expect the 1w

Repo Rate to be hiked to 17.5%, O/N Lending Rate to 19% and O/N Borrowing Rate

to 16%. TDS add "The Late Liquidity Window rate, instead, should remain

unchanged at 19.50%. The consensus is split between expectations for a hold and

tightening, with a slight majority in favour of the former. Amongst the reasons

that justify a hike today, inflation is the most evident one. May CPI

accelerated to 12.15% Y/Y from a prior 10.85% mostly on higher oil prices and FX

pass-through."

"Furthermore, ahead of the 24 June elections, the CBRT will likely want to avoid

that a lira sell-off reflects negatively on the government and, thus, higher

rates will help stabilize USDTRY. This argues for some degree of tightening

though it's difficult to say how much exactly. However, recent comments from the

government read like partial backpedalling from last week's commitment to hike

on higher inflation, and skew the risks for our forecasts firmly to the

downside."