The Turkish central will announce its monetary policy decision at 12:00 GMT. The consensus is for no change in rates. After the strong GDP, the better-than-expected IP and the higher-than-expected inflation, there are good reasons for the CBRT to stay put, particularly after the 50bp cut in August. Nevertheless, the CBRT likes to surprise the market. In such a scenario, the repo shouldn’t be the monetary instrument as the CBRT would rather use the RRR. But the surprise may actually come from the borrowing rate. The CBRT may want to support further the TRY and a hike of the borrowing rate currently at 5.00% would increase the lira’s appeal. Such an action would reinforce the outperformance of the TRY vs. the other high-yielding currencies.
HSBC Global Research