MNI CBRT Review - November 2021: MPC Guides Towards Possible December Cut

Executive Summary

• CBRT Reduced its 1-wk repo by 100bps to 15.00% (as expected)
• Reductions were again justified with claims of 'transitory' supply-side factors, which continue to deviate sharply from the fundamental market conditions
• Most notable change to the statement was that the committee would "consider to complete the use of the limited room implied by these factors in December" – hinting at another possible cut to the 1wk repo rate in the 50-100bp range
• USD/TRY weakened sharply after the result with markets having pared back cut expectations slightly, given the acute depreciation of the lira heading into the meeting

Full Review Here:

CBRT Review 19.11.21.pdf

As expected, the CBRT delivered a 100bp cut to the 1-wk repo, while signalling scope for another reduction in the December – taking rates deeper into negative real yield territory. The statement provided little change in terms of content, but alluded to more room for cuts by saying the Committee would "consider to complete the use of the limited room implied by these factors in December" – reflecting the broadly political nature of the bank's current reaction function, rather than being dictated by fundamental market conditions.