The 650bp interest rate hike by Turkey’s central bank today (to 15.0%) will underwhelm investors that wanted a faster and more aggressive monetary tightening. The currency has come under a bit of pressure since the announcement. But the communications provided some encouraging signs that further steps are likely to be taken and we still think that interest rates could rise to 25-30% this year. The CBRT will have to follow through on this to limit the risk of more disorderly falls in the currency.
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