Turkey | CBRT remains “tight” but closer to “ease”

Summary

As expected, the CBRT maintained its policy rate unchanged. Important uncertainties on politics and geopolitics remain to be solved, so today’s decision is a prudent one. We maintain our view that the CBRT will start the gradual easing cycle towards the end of the year, but the expected disinflation could bring it forward.

Key points

• Key points:
• The Central Bank of Turkey (CBRT) maintained its policy rate unchanged (one-week repo, 24%) in line with expectations.
• The CBRT has opted to gain some credibility by “reinforcing the disinflation process” and cope with the political and geopolitical uncertainties in the short term.
• We maintain our view that the CBRT will start the gradual easing cycle towards the end of the year, but the expected disinflation path could bring it forward.

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