Analysts at TD Securities suggest that in line with the almost unanimous consensus, they expect the CBRT to keep its policy rate, the one-week repo rate, on hold at 24.0% at today’s MPC meeting.
Key Quotes
“We think any attempt to cut rates runs the risk of exacerbating the weakness we have seen in lira since the start of this year. Although the government would no doubt like to see rates lower ahead of the March local elections, if the CBRT eases rates now, or cuts too early even at a later date, the lira reaction may be too adverse, and would require such cuts to be quickly reversed.”
“We think a hold accompanied by the usual hawkish rhetoric will defuse any concerns that the market may currently have about imminent cuts and help the lira strengthen for now, but we see 5.40 as the floor for USDTRY.”
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