In line with the consensus, analysts at TD Securities are expecting the CBRT to hold its policy rate, the one-week repo rate, at 24%.

Key Quotes

“The announcement comes against the backdrop of still high inflation at 19.7% y/y in March (unchanged from February, but which has limited relevance for the CBRT at this juncture) and several other controversies that leave TRY prone to further weakness.”

“Amongst the two most crucial political issues with potential for inducing sharp TRY moves, we highlight the dispute around the Istanbul election result, and the diplomatic spat over the S-400 purchase.”

“We also flag market concerns over the erosion of FX reserves. All these risks suggest higher rates to ensure TRY stability and faster deceleration in CPI. However, in the absence of currency shocks, we expect CBRT to stay put for now.”

“Of particular interest may be whether the CBRT rewords its statement that "if needed, further monetary tightening will be delivered." Also, CBRT will publish Net International Reserves which according to dynamics in Net Foreign Assets should move from $28.4bn to around $27bn - any relevant downside surprise would have negative TRY effects.”

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