• Central Bank of Turkey likely to hike one-week repo rate in July

    Source: FxWire Pro - Commentary / 20 Jul 2018 17:31:17   America/New_York

    The Central Bank of Turkey is set to meet for a policy decision next week. According to a Barclays’ research report, the CBT is expected to hike the one-week repo rate by 125 basis points during its July meeting, given the backdrop of a deteriorating inflation trajectory, prevailing investor scepticism and rising external risks in the midst of an intensifying ‘trade war’ rhetoric, along with concerns about Chinese slowdown. At present, markets are expected about 100 bps hike in interest rate during July MPC meeting.

    After the inflation print of June month, the risks to Barclays’ projection of an unchanged policy rate of 17.75 were noted to be increasingly tilted towards a hike in July. The rate call was based on the MPC’s June statement, in which the central bank had hinted at a likely pause in order to monitor the evolution of pricing behaviour in light of the anticipated economic deceleration given the central bank’s reference to economic rebalancing inflation peaking at about 14 percent and falling to 13 percent year-on-year, stated Barclays.

    Since the June MPC, inflation accelerated sharply to 15.4 percent year-on-year, overshooting expectations and revealing ongoing widespread price pressures and comparatively solid pass-through from domestic PPI to CPI inflation.

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