Turkish rate hike brings only temporary relief for the lira

The move by the Turkish MPC to hike its late liquidity rate by 75bp today only brought temporary relief for the lira and suggests that markets are unconvinced about policymakers’ willingness to shore up the currency. Taking that together with a widening current account deficit and a likely rise in inflation in the next few months, we think that the MPC will tighten policy further.

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