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According to analysts at TD Securities, the CBRT removed the mention to “if needed, further monetary tightening will be delivered” which is a dovish signal and has been taken very negatively by the market as it reduces the CBRT commitment to hiking rates again if need be.

Key Quotes

“Given the upwards pressure on USDTRY in recent weeks, we think that the removal of this pledge shows a remarkable degree of complacency and/or naivety on behalf of the CBRT.”

“In line with the almost unanimous consensus, at today’s MPC meeting, the CBRT kept its key policy rate, the repo rate, on hold at 24%.”

“We maintain our bearish view on the lira and see USDTRY at 7.90 by end-Q2 and higher at 8.90 by end-Q3. We see the CBRT as being forced to hike further in the coming months, with a terminal WACF rate at around 30%.”