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SocGen on CBRT

TURKEY
  • Although inflation is likely to accelerate further, rate hikes are still off the table in SocGen view.
  • SocGen sees the official Turkstat annual inflation peaking at 87% in October – the CBRT itself revised end-2022 inflation by 18pp to 60.4%.
  • Instead, SocGen expects the CBRT and Turkish authorities to continue focusing on other measures, like curbing credit growth, disincentivising holdings of hard currency, and supporting the lira.
  • Regarding the latter, the CBRT’s FX reserves have increased considerably of late, likely due to transfers from Russia and news of possible future inflows from Saudi Arabia.
  • SocGen base case is for the CBRT to continue its current policies until at least next year’s elections, which are scheduled for 18 June.
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  • Although inflation is likely to accelerate further, rate hikes are still off the table in SocGen view.
  • SocGen sees the official Turkstat annual inflation peaking at 87% in October – the CBRT itself revised end-2022 inflation by 18pp to 60.4%.
  • Instead, SocGen expects the CBRT and Turkish authorities to continue focusing on other measures, like curbing credit growth, disincentivising holdings of hard currency, and supporting the lira.
  • Regarding the latter, the CBRT’s FX reserves have increased considerably of late, likely due to transfers from Russia and news of possible future inflows from Saudi Arabia.
  • SocGen base case is for the CBRT to continue its current policies until at least next year’s elections, which are scheduled for 18 June.