MPC stays on hold

TURKEY - In Brief 23 Mar 2023 by Murat Ucer
We are happy to report that there is almost nothing to report from today’s CBRT/MPC meeting. The Committee kept the policy rate unchanged at 8.5%, in line with our expectation, versus a more divided set of views in the analyst community (link here). The Bank kept the sentence on the policy outlook – “[t]he Committee assessed that the current monetary policy stance is adequate to support the necessary recovery in the aftermath of the earthquake by maintaining price stability and financial stability” – unchanged as well (link here). A quick parsing of the statement suggests -- more broadly -- that there are no material changes to the previous one. Disappointingly, as regards the earthquake impact on macro aggregates, inflation outlook, in particular, there is still no useful guidance in the statement, with the Bank simply reiterating the mantra that “the impact of the earthquake on production, consumption, employment and expectations is being extensively evaluated”. Looking ahead, while we cannot rule out anything here, given the Bank’s erratic track record, it seems like we will enter the May 14 elections with a policy rate of 8.5% accompanied by myriad interventions to curb F/X demand, particularly from corporates. (Note that the next two MPC meetings are on April 27 and May 25). Let us take this opportunity to add that we are still planning to issue a macro update tomorrow -- or on Sunday, at the latest.

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