Turkish central bank holds fire, plays a dangerous game

The decision by the Turkish central bank to keep interest rates on hold, when hikes had been widely anticipated, will probably result in renewed concerns that the MPC’s decisions are being swayed by government pressure. The accompanying statement did suggest that we may see interest rate moves at January’s Council meeting, but any further delays would rattle investors further, resulting in an even weaker lira and, possibly, larger rate hikes further down the line.