MNI CBRT Review: March 2023 - Rates "Adequate" Ahead of Final Pre-Election Meeting

Executive summary:

• The CBRT kept the one-week repo rate unchanged at 8.50%.
• Sell-side analysts were split between seeing no change and a further 50bps cut following February’s easing.
• The accompanying release indicated once again that current rates are now “adequate” to support the economy’s recovery in the aftermath of the earthquake.
• April’s MPC meeting is the last before the May 14 elections.

See the full MNI Review including sell-side analyst views here:

MNICBRTRevMar23.pdf

The CBRT left the one-week repo rate unchanged at 8.5% in March and have once again described rates as “adequate” following 50bps of easing in February. As expected, USD/TRY did not react to the decision as the government’s continued intervention provides a backstop to further TRY depreciation ahead of the elections.

The press release reiterated that the level and underlying trend of inflation has been improving in recent months due to the policy approach but noted that conditions threatening global financial stability have emerged. The statement was otherwise little changed and repeats previously offered guidance that the effects of the earthquake in H1 will be closely monitored.