Turkey’s central bank maintained its key rate at 19% for the third month even as it sounded more hawkish, terming its monetary stance “tight.”
- Turkey’s inflation has increased for seven months even as the central bank promised to keep policy unchanged until meaningful progress is achieved.
- Investors read a more hawkish Turkey’s central bank after it introduced words like “tight” replacing previous “decisively” in reference to its monetary stance.
- Turkey’ lira has been one the worst performing currencies in the emerging market, with rising oil prices likely to push inflation higher.
- The central bank expects price gains to fall to 12.2% by the end of this year, after peaking in April
- Since central bank governor Sahap Kavcioglu took over in March, lira has shed at least 15%
- Turkey’s fuel tax hike that was introduced in May is expected to push consumer prices higher amid global supply constraints
Some analysts expect Turkey’s central bank to reduce the benchmark rate in the third quarter while others see it in the last quarter of the year.
USDTRY is up +1.09%.
Source: Turkey’s Central Bank