CBRT - Central Bank of the Republic of Turkey

12-AUG-2022

CBRT ANNOUNCEMENT (THU): The Turkish Central Bank is expected to maintain its Weekly Repo Rate at 14.00% at its upcoming meeting. Turkey's recent monetary policy decisions have not been based on economic fundamentals, with late 2021 seeing a cumulative 500bps cut in rates in a matter of months to current levels. In December last year, the Turkish Central Bank introduced a "Lira deposit scheme" to stem the decline in the currency. On the data front, July CPI Y/Y (79.60% vs exp. 80.50%) and M/M (2.37% vs exp. 2.90%) printed cooler-than-expected but still hotter than the prior but PPI rose to an eye-watering 114.61% from 138.31%. The CBRT survey upgraded its end-year CPI forecast to 70.60% from 69.94%, whilst also upping its USD/TRY forecast to 19.6480 from its prior forecast of 18.9881. The survey also upped its 12-month Repo Rate forecast to 16.5% from 15.0%. "The authorities will probably continue to implement ad hoc measures as long as they can in order to sustain what we view as this ultimately unsustainable policy stance", analysts at Credit Suisse say, "Our 12-month policy rate forecast of 14.00% does not imply that we think the current policy stance is sustainable for 12 months." The Swiss bank also highlights that policy adjustment "will also crucially hinge, in our view, on political considerations, in particular the presidential/parliamentary elections that will be held no later than in mid-2023."