Turkey's Central Bank Keeps Interest Rate Unchanged
On Thursday, the Central Bank of the Republic of Turkey (CBRT) decided to keep its key interest rate unchanged at 9.00%, as expected by analysts. This move comes one month after the CBRT announced the end of its easing cycle.
Analysts Predict Further Easing in the Future
According to analysts from TD Securities, the CBRT may consider easing in the future, as indicated by the statement that "the comprehensive review of the policy framework continues with the aim of encouraging permanent and strengthened liberalization in all policy tools of the CBRT." However, the CBRT has shown no concern over a potential market misinterpretation of this statement, which is concerning to TD Securities.
Dramatic Rate Hikes Expected in 2023
Despite current conditions that seem to discourage a negative outlook on the lira in the short term, TD Securities believes that dramatic rate hikes will be necessary in 2023. This is due to the fundamental backdrop, which suggests that this is the most likely course of action. However, these rate hikes will only occur once the lira becomes unhinged again.