Lira slump likely to trigger rate hikes

Mounting concerns about Turkey’s current account deficit as well as debt problems in the corporate sector are likely to keep the lira under pressure over the coming weeks. As a result, we now expect the central bank to respond by tightening monetary policy. We have pencilled in a 100bp hike in the late liquidity lending rate (to 13.75%) at the MPC meeting later this month.

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