CBRT defies inflation surge and leaves rates on hold

The further rise in inflation to close to 50% y/y in January was clearly not enough to sway Turkey’s central bank (and crucially, President Erdogan) to shift back to orthodoxy as the one-week repo rate was left at 14.00% at today’s MPC meeting. We expect policy to be kept unchanged over the coming months and, if anything, political pressures mean that the next move in rates is more likely to be down than up.