Flash Report / Turkey

Turkey: Old habits die hard as central bank reverts to stealth tightening

  • The CBRT surprised markets by holdings its policy rate at 10.25% and hiking its late liquidity rate by 150bps
  • The lira responded by depreciating sharply, indicating disappointment that the CBRT has reverted to back-door measures
  • TRY pressure will remain until the core issue of CBRT credibility is addressed, and/or external imbalances reduced
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