Turkish Central Bank Expected to Raise Policy Rate by 5ppt to 20% Amid Rising Inflationary Pressures

^{Turkey: Expected policy rate hike of 5ppt to 20%}

^{The CBT has acknowledged that inflation has been well above its target, which calls for more effective use of monetary policy. The June decision was considered to be "the first step of the monetary tightening process”. Given this backdrop and rising pricing pressures amid i) FX pass-through from recent lira weakness, ii) strong mid-year wage adjustments and iii) inflationary effects from the government’s revenue rising measures, we expect a policy rate hike of 5ppt to 20%. However, risks point to a smaller move given the bank’s signals of gradualism.}

 

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