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Commerzbank Expect Larger Than Consensus CBRT Rate Hike Today

TURKEY
  • The Bloomberg consensus range of expectations appears to be centered around the 18.5% mark for today. But Commerzbank say they read numerous references in the media to the rate being hiked to 20%. They say this latter outcome likely because latest inflation data showed sharp acceleration in FX-passthrough.
  • In their view, a 500bp rate hike will fall within expectations, but it will be large enough to let the debate progress to factors such as the consequence of rate hikes, whether or not conventional monetary policy will be successful, and until when President Erdogan will hold patience with this process.
  • On the other hand, a smaller 350bp hike will immediately trigger usual short-term concerns and pressure on the lira.

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