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MNI (London)

Executive Summary:

  • The CBRT are again firmly expected to keep policy rates unchanged at 14.00%
  • Rate hikes remain a tail risk, with the bank board unwilling to tighten policy ahead of the election cycle next year
  • Bank reiterated that “Liraization” measures will continue to be implemented
Full preview including summary of sell-side analyst views here:

MNICBRTPrevJul22.pdf

The CBRT are again firmly expected to keep policy rates unchanged at 14.00% in July in the seventh consecutive unchanged decision at the bank, which seemingly continues to operate under considerable political influence and is willing to look through inflation that could exceed 80% in the coming months. Looking ahead, rate hikes remain a tail risk, with the bank board unwilling to tighten policy ahead of the election cycle next year. As such, most analysts expect rates at 14.00% into year-end.

Governor Kavcıoğlu has overseen the CBRT’s easing cycle of 500bps of rate cuts since appointment in March 2021. Markets remain of the view that political motivation underpins this unorthodox approach to policy during this rapid inflationary phase. The previous CBRT June 23 statement stated that inflationary pressures were caused by energy prices due to the geopolitical landscape, alongside negative supply shocks. The Bank reiterated that “Liraization” measures will continue to be implemented and resolution of ongoing conflict will see deflationary effects.

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