Turkey: CBRT likely to hike rates by 100bps - TDS

Analysts at TD Securities note that the Bloomberg survey for today's CBRT rate decision has forecasts ranging from 0 to +150bps for the hike in the benchmark one-week repo rate (currently 17.75%).

Key Quotes

“We are inclined to go with the median consensus and expect a 100bps hike. The case for a hike is straightforward. June CPI inflation leapt to 15.5% Y/Y, ahead of the consensus of 13.9% and up from the prior 12.15%.”

“The main drivers of the jump higher in the headline rate were food and fuel prices, but, worryingly, core inflation also moved up sharply, to 14.6% Y/Y from 12.6%.”

“Furthermore, since just before the last MPC meeting on 7 June, the lira has continued to weaken, by about 4% against the US dollar. If the CBRT does not hike rates, then the markets will take this as a clear sign of political interference and USDTRY will move sharply higher.”