Turkey | The CBRT keeps the policy rate unchanged

Summary

The Central Bank of Turkey (CBRT) maintained the policy rate (one-week repo) at 17% in line with the expectations. We maintain our expectations having the first rate cut of the CBRT in 4Q21 and expect the policy rate to be 14% at the end of 2021.

Key points

• Key points:
• The two forward guidance remarks have also been kept the same: (i) the commitment for additional monetary tightening if needed, (ii) the decisive maintenance of the tight stance “for an extended period of time”
• The point that clarifies the policy goal in the medium term has also been added by means of the commitment of a real interest rate level between the realized/expected inflation and the policy rate until 5% target is reached.
• We expect consumer inflation to end the year at 10.5% and forecast the CBRT to start only a gradual easing cycle in 4Q21 and reduce to policy rate to 14% at the end of the year.

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