CBRT meeting: nothing to say, really...

TURKEY - In Brief 23 Jun 2022 by Murat Ucer
The Monetary Policy Committee (MPC) kept its policy rate at 14% (simple), in line with expectations. The statement has little new, other than stating that growth likely remained positive in Q2 (which is also what we see), and that the Bank could do more macro-prudential measures if need be (unsurprisingly). Judging from the amended sentence ("[t]he collateral and liquidity policy actions, of which the review process is finalized, will continue to be implemented to strengthen the effectiveness of the monetary policy transmission mechanism"), we sense that Ankara could introduce additional (distortionary) measures with adverse effects on the banking sector balance sheets, though we do not know what those measures could be. The bottom line is that there is really nothing new to report from today's MPC meeting. With hands tied by the Palace, the CBRT is trying to work around this constraint by way of, ironically, not "strengthen[ing] the effectiveness of monetary policy mechanism", but by hugely distorting it. In the meantime, the clock keeps ticking, because the pressure in the F/X market remains elevated.

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