Turkey: CBRT likely to keep rates on hold – TDS

In line with the almost unanimous consensus, analysts at TD Securities are expecting the CBRT to keep its benchmark rate, the 1-week repo rate, on hold at today's MPC meeting.

Key Quotes

“The MPC will be reasonably happy with developments on the inflation front since the last meeting in April. In May headline CPI inflation continued the downtrend, falling to 18.7% y/y from 19.5% in May, and core inflation fell to 15.8% y/y from 16.3%.”

“Furthermore, USDTRY is slightly lower and Brent crude is down about 16% in $ terms. Added to all this, the global environment has shifted in a distinctly more dovish direction. However, with political risks to the lira abounding right now (e.g. Istanbul election rerun and the S-400 issue), the CBRT will want to adopt a cautious stance and, in any event, will want to prepare the markets more for possible rate cuts. So the CBRT might want to test the waters today with a bit more dovish language, but that is as far as they will go.”