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ING Expect 250bp Rate Hike and Continuation of Regulation Unwind

TURKEY
  • ING expect the CBRT to maintain the pace of its rate hikes, raising the policy rate by 250bp to 20% and signalling the continuation of further monetary tightening. They say the bank will also continue to rely on alternative instruments and the gradual unwinding of banking sector regulations.
  • With the current pace of hikes, the real policy rate – which is in deep negative territory – will begin declining once again and will likely remain there for longer, ING say. This will likely add to pricing pressures on inflation and could potentially weigh on reserves.
  • They say that given that the new uptrend in inflation challenges the gradual monetary policy approach, the August MPC meeting with its three newly-appointed members will be an important one to watch.

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