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MNI CBRT POV: Additional, Regular Tightening Expected (1/2)

TURKEY
  • While the CBRT were widely expected to continue with their tightening cycle in July, there was no consensus regarding the magnitude of the rate hike. Sell-side estimates ranged between a 250-500bp increase, and the CBRT therefore delivered on the lower end of expectations with 250bps.
  • Since then, Simsek has continued to stress that policy will continue to be tightened and simplified. Moreover, he remains bullish on Turkey’s growth prospects in 2H23 (https://marketnews.com/simsek-sees-2023-gdp-growth...).
  • Additionally, FX reserve balances have continued to increase while there has been a step-up in the campaign to seek foreign investment. Deals worth upwards of $51bln were signed with the UAE in July and, most recently, Simsek said he will meet with Japanese investors to discuss investment opportunities in Turkey. The Finance Minister’s drive to accumulate reserves drive has likely extended in private. Notably, he held a meeting with as many as 50 investors including sovereign wealth funds in early August.

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