Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Executive Summary:
- The Central Bank of Turkey is widely expected to keep the one-week repo rate on hold at 50%, having likely concluded its tightening cycle following an above consensus 500bp rate hike in March.
- Nevertheless, given that the lira’s path of depreciation has largely been uninterrupted and that headline inflation still running close to 70%, central bank communication is likely to tilt hawkish once again.
- All of the sell-side analyst views we have collated in this document are expecting no change to the repo rate at this juncture.
See the full preview, with a summary of sell-side analyst views, here:
Since the previous MPC meeting, headline inflation has risen to 68.50% in March from 67.07% the month prior (Est: +69.10%), with policymakers anticipating that disinflation will only be established in the second half of the year. Central bank Governor Fatih Karahan said at the Internation Monetary Fund/World Bank spring meetings in Washington last week that the Bank remains on course to hit its 36% inflation target by the end of the year and aims for single figures by the end of 2026. But overall, neither current nor expected inflation developments can be described as “significant” or “sustained” and therefore do not yet warrant consideration of easier monetary policy. Similarly, there has not been a notable deterioration in dynamics which would justify another rate hike.
Beyond the immediate horizon, the lira is likely to play an increasingly important role over the rate path through to the end of the year. A leading Turkish economist told MNI that a stable lira could allow the CBRT’s next significant monetary policy move to be an interest rate cut later in the year to stimulate growth, while a former Governor said a year-end inflation figure close to 40% may be achievable if policymakers can prevent the lira’s rate of depreciation falling below the rate of inflation.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.