Turkey: Lira pressure to increase after irresponsible rate cut

  • The CBRT cut its policy rate by 100bps to 13% despite c80% inflation, against consensus expectations for a hold

  • This takes the real policy rate to a foreboding -66.6% and will fuel further currency and price pressure

  • We think only a severe currency crisis will prompt a policy reversal, and retain our Sell recommendation on the TRY

August 18th, 2022
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