PRIMER: Turkish Central Bank (CBRT) is almost wholly expected to hold its Weekly Repo Rate at 14.00% on Thursday at 11:00GMT/06:00EST

Analysis details (15:00)

OVERVIEW: The CBRT is almost wholly expected to hold its Weekly Repo Rate at 14.00% at the upcoming meeting, with only one out of 16 respondents forecasting a cut of 50bps. The almost-one-sided expectations come amid the extraordinary measures taken by Turkey since the prior meeting to rein in the weakening Lira and its subsequent effects on inflation.

TURKISH MEASURES: The Turkish President unveiled a new financial mechanism late December to support the Lira. The Lira-deposit protection scheme announced will in theory encourage savers to convert FX deposits and support the TRY. Under the scheme, the Treasury and Central Bank would reimburse losses emanating from converted Lira deposits. The measures at the time led to a sharp reversal of Lira weakening – USD/TRY was hovering north of 18.00 pre-announcement. Note, the CBRT will also hold an extraordinary general meeting on Feb 3rd, “with issues on the agenda to include the advance payment of profits to the Treasury and the distribution of reserve funds.”

DATA AND INDEPENDENCE: Turkish President Erdogan reiterated his pledge to lower inflation whilst refraining from hiking rates. Given this stance, incoming data has less of an influence in policy decisions – despite Turkish CPI soaring to 36% Y/Y in December – a 19-year high. Nonetheless, reports citing the Finance Minister suggested that inflation will likely start to fall from May and reach single digits by mid-2023. In terms of the latest CBRT survey, end-2022 CPI is seen around 29.75%, GDP (end-2022 circa 3.7%), the Repo Rate (in 12 months) at 16.33% and USD/TRY around 16.1350 by the of this year.

19 Jan 2022 - 15:00- Fixed IncomeData- Source: Newsquawk