At the April Monetary Policy Committee meeting, the Central Bank of Turkey (CBT) hiked its policy rate by 350bp to 46% and preserved its flexibility by maintaining the asymmetry in the rate corridor.
The food group was once again the key driver behind Turkey’s rising inflation rate in November following a similar trend in October. Even so, the downtrend in the annual inflation rate has remained in place.
Turkey’s economic activity has lost further momentum in the third quarter thanks to tight financial conditions, while its growth composition improved further on the back of a higher contribution from net exports.
The central bank seems to have slowed down the depreciation of the lira recently. It has done this not by selling FX to the market, but by slowing down the pace of FX purchases.
Turkey’s current account recorded a large surplus in August, while the 12-month rolling deficit plunged to its lowest since the end of 2021. We think the external outlook will likely remain benign in the near term.
As widely expected, Turkey’s central bank has kept rates on hold (50%) at the September rate-setting meeting, reiterating its attentiveness to inflation risks.
Between 1990 and 2023, the world population grew by more than 50%. But not all countries grew at the same rate, and some in fact, some didn’t grow at all.
Global markets faced turbulence on Wednesday, with Turkish assets experiencing significant declines amid a backdrop of international economic concerns.
While the policy rate was kept on hold at 50% in its June MPC meeting, the Central Bank of Turkey retained its tightening bias and continued to monitor liquidity conditions.
Because of a temporary increase in the April trade deficit, the improvement in the current account was interrupted, although provisional data for May hints at a return to the recovery trend.
Turkey’s annual inflation reached its cyclical peak in May at 75.4% with price increases across the board in both food and non-food groups, in addition to one-off effects from the energy group.
In this week’s Dirty Dozen we cover crashing fund flows, an aging Risk Cycle, mild intermediate sentiment, stretched gold, a confirmed breakout in a potash producer, and a major squeeze in currencies, plus more…
US GDP for the first quarter and the Federal Reserve’s favored measure of inflation, the core PCE deflator, will be the main releases to watch next week.
The downward trend in the Turkish current account remained intact in February, with a further drop in the 12-month rolling deficit to US$31.8bn from US$37.5bn a month ago.
The Central Bank of Turkey hiked its policy rate by 500bp to 50% and announced a large set of macro-prudential measures and significant efforts to mop up excess TRY liquidity.
Turkey's fourth-quarter GDP data showed that private spending has accelerated despite an increasingly restrictive policy stance while leading indicators point to a further acceleration in GDP growth in the first quarter of this year.
Earlier, the GBP/USD pair rose to 1.2722 on Tuesday after data from the economic calendar showed that the US ISM services PMI reading came in at 52.6 in February
