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

TURKEY
  • Of note, the rally in Turkey’s banking stocks has recently accelerated and recorded fresh cycle highs alongside persistent public interjections from Simsek, who has stressed that easing credit conditions will arrive in the coming months, along with a slowing of inflation. Moody’s upgrade of Turkish banking stocks from ‘Negative’ to ‘Stable’ provided an additional tailwind.
  • While the CBRT have reiterated that they plan to simplify the existing macroprudential framework as part of the return to more conventional monetary policy – a move which should improve net margins of state banks – some sell-side desks are sceptical as to whether the current set of policies will be enough to resolve long-term problems and restore credibility in the central bank (E.g. https://marketnews.com/commerzbank-revise-year-end...).
  • Further tightening is expected at the Aug 24 meeting, with a hike of 250bps the median of the Bloomberg survey. Our full preview of the decision, with a summary of sell-side analyst views, will be released next week.

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