Phraseology Over Remaining Room To Ease In Focus as CBRT Approaches

Just Over 10 Minutes to the CBRT meeting:

• A 100bp cut is expected to 14.00%, but uncertainty remains high with potential for a larger cut or even a hold on the table.
• USD/TRY trades +2.13% higher pre-statement. Yields are mostly higher across the TurkGB curve with a slight bear steepening bias. USD bonds treading water around the open.
• Focus will be on language surrounding remaining space for easing after the prior statement noted that the MPC would “consider to complete the use of the limited room in December.”
• Change in this statement to no further room would likely add weight to calls for a near-term end to the easing cycle, while keeping the phraseology the same may hint at more cuts in the pipeline for 2022 in the lead-up to the 2023 elections.
• Here, we’re reminded that Erdogan said rates would continue to fall before elections.