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UniCredit Expect 350bp Rate Hike Next Week

TURKEY
  • UniCredit expect the CBRT to carry on with rate hikes and raise its policy rate by 3.5pp, to 18.5%. They think the CBRT will opt for a smaller hike compared to last time, possibly relying on favorable seasonal effects for current account balance, which could imply monthly surpluses, and hence, TRY performance over the summer.
  • In the remainder of the year, additional rate hikes could bring the policy rate to 25%, UniCredit say. However, demand for lower rates from government could resume as local elections draw closer. Consequently, they expect the central bank to lower its policy rate to 20% in early 2024.

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