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Turkey Central Bank
Turkey Central Bank
Executive Summary
- The CBRT is expected to reduce its 1-wk repo by 100bps to 14.00% as Erdogan presses forward with the reinvigorated low rates, high growth/exports development model.
- Headline inflation rose to 21.3% y/y in November, and is expected to surge to 25% y/y in December & 30-32% in 1H22 as delayed FX passthrough filters into CPI metrics.
- Depreciation of TRY assets remains acute, despite the CBRT’s broadly ineffective use of FX reserves to stabilise the currency, given its -$37.5bn net reserve position and a tightening external environment in 2022.
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The CBRT is expected to reduce its One-week repo rate by a further 100bps to 14.00% this week, doubling down on its reinvigorated lower rates, high growth strategy that remains broadly against the trend in EM. The outlook for Turkey continues to darken with deeper negative real yields and delayed FX passthrough from Oct/Nov supporting expectations for a surge in CPI through 1Q22 - compounding risks to lira volatility and unconventional monetary policy in the near to medium-term.
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
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.
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