Reluctant Hiker?

TURKEY - In Brief 21 Jan 2014 by Murat Ucer
The MPC did not change any of the rates today, but said that it would drive money market rates to 9% (from 7.75% currently) on additional monetary tightening (AMT) days. This, the Committee said, aims at aligning the inflation outlook with the medium term target. Our first impression is that this is another timid hike by the CBT -- the good news is that it IS a hike in the sense that on average it should drive money market rates higher than the current 7.75%. The problems is that we don't know by how much, because it is completely up to the Bank to call the number of AMT days. What was needed, in our view, was a bold, permanent and visible hike with signals that more is to come. How close this move comes to this normative benchmark is up to you to decide, but we think it is quite far from it. We will follow up after giving it some more thought...

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