CBRT did not surprise in surprising markets with sweeping changes to monetary and FX policies in today’s interim meeting. The policy priority shifts to supporting domestic growth in light of deteriorating global environment. To be fair, CBRT has been consistently right in reading the global conjuncture, however the overall economic policy mix and multiple targets have not prevented imbalances from building up in Turkish economy. At the end of the day, Turkey’s savings gap is structural and growth has to be financed by external funding but markets are getting increasingly more sceptical.
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HSBC Global Research