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SocGen See Rates Unchanged at 14.00%

CBRT
  • Despite inflation likely to accelerate to a peak of 87% in October, SocGen see any change to monetary policy as unlikely. Furthermore, there is unlikely to be any significant refinement to the bank’s communication.
  • Instead, SocGen expect the CBRT and Turkish authorities to continue focusing on other measures including curbing credit growth, disincentivising holdings of hard currency, and supporting the lira. In their view, measures controlling credit growth and higher foreign reserves are unlikely to prevent a depreciation of the lira in the winter due to an unsupportive external balance, forecasting USD/TRY at 22 by end-2022.
  • The base case is for the CBRT to continue its current policies until at least next year’s elections, scheduled for 18 June.
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  • Despite inflation likely to accelerate to a peak of 87% in October, SocGen see any change to monetary policy as unlikely. Furthermore, there is unlikely to be any significant refinement to the bank’s communication.
  • Instead, SocGen expect the CBRT and Turkish authorities to continue focusing on other measures including curbing credit growth, disincentivising holdings of hard currency, and supporting the lira. In their view, measures controlling credit growth and higher foreign reserves are unlikely to prevent a depreciation of the lira in the winter due to an unsupportive external balance, forecasting USD/TRY at 22 by end-2022.
  • The base case is for the CBRT to continue its current policies until at least next year’s elections, scheduled for 18 June.