Underwhelming hike, improved statement

TURKEY - Report 22 Jun 2023 by Murat Ucer

Under the new Governor Hafize Gaye Erkan’s stewardship, the 5-member Monetary Policy Committee of the CBRT hiked the policy rate (one-week repo rate) to 15% from 8.5% today, markedly less than the consensus forecast of 20-25%, which happens to be the first increase in the policy rate since Governor Naci Agbal’s ill-fated hike of 200 bps in March 2021 (see chart). Considering that the consensus reflected a compromise of sorts in the first place, between “what ought to happen” (the normative) and “what could happen in reality” (the positive), today’s hike is truly underwhelming, as we feared.

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