MNI CBRT Review - July 2021: CBRT Stays On Hold, Cautious on Summer CPI Volatility

Executive Summary:

• Rates left unchanged at 19.00% (as expected)
• The statement was little changed, but marginally more cautious, citing risks to volatility in the CPI outlook over the summer period, supply-side risks to pricing behaviour and elevated expectations – but fell short of raising the bar on its hawkish guidance
• CBRT re-affirmed its commitment to keeping interest rates above inflation until its disinflationary target is met
• The CBRT became more positive on current account dynamics, expecting a surplus for the remainder of the year

CBRT Review 15.07.21.pdf

Overall, the July CBRT meeting was broadly uneventful with some minor changes in the statement to convey a higher degree of concern about volatility in the CPI outlook over the summer period, supply-side risks to pricing behaviour and elevated expectations – but fell short of raising the bar on its hawkish guidance. Kavcioglu reiterated that policy would be maintained above inflation until disinflationary factors had taken root – as has been the trend in prior statements.