Turkish lira stability could be short-lived if CBRT fails to reverse course

  • CBRT held the repo rate at 14%, in line with expectations, adopting a wait-and-see approach, despite the inflation spike

  • With inflation at 36% and a -22% real policy rate, aggressive hikes are needed to prevent a further inflation spiral

  • Policy interventions have stabilised TRY but raised risk, with weakness likely to resume without rate hikes; retain Sell

January 20th, 2022
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