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 CBRT are expected to deliver a significant rate hike following the appointment of a new Treasury and Finance Minister and central bank Governor.
- Both appointments signal a return to more orthodox monetary policy though there remains high uncertainty regarding the magnitude of the hike in June as well as the pace of a return to conventional policy more broadly.
- Among sell-side analysts, there is wide range of views surrounding the magnitude of the potential rate hike with Bloomberg estimates ranging from 14% to 40%.
President Erdogan secured victory in the second-round run-off election and reshuffled his cabinet. The most notable change was the appointment of market-friendly Mehmet Simsek as the new Treasury and Finance Minister. Simsek promised a ‘credible program’ for Turkey and made clear that changes are in store for the economy. “Turkey has no other choice than to return to a rational ground,” he said after his appointment. “A rules-based, predictable Turkish economy will be the key to achieving the desired prosperity.”
The June decision marks a crucial step toward restoring market confidence with what will likely be the beginning of a tightening cycle. Given the lack of formal guidance from the bank on near-term policy post-election, there remains significant two-way risk for markets at this juncture - evident in the considerable spread of expectations among sell-side analysts. The broad range of potential outcomes has kept implied volatility supported (one week vols at ~30 points vs. 2023 average of 15 points) and suggests markets could see a sizeable reaction following the rate decision. Guidance regarding the pace and magnitude of policy normalisation will be closely watched, with many sell-side analysts expecting tightening to be gradual in the interest of protecting macro-financial stability
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.