Domestic markets focused on TCMB

Following the Fed’s hawkish stance, attention in domestic markets turned to the interest rate decision of the Central Bank of the Republic of Turkey (TCMB). The Central Bank of the Republic of Turkey (TCMB) is reconvening today after the 750 basis point interest rate hike that exceeded all expectations last month. The median expectation of institutions participating in the Bloomberg HT survey regarding the decision to be announced at 14:00 is for the policy rate to be increased by 500 basis points to 30 percent. Before the decision, President Recep Tayyip Erdoğan had said the following about inflation in New York: “Our economic team is working hard on these issues. They are managing a successful process and I believe that we will achieve this by the end of the year, at most at the beginning of the year, and we will get the necessary positive results from here and with this, we will enter 2024 in a very different way.” Although the market expects a 500 basis point increase, economists believe that a higher front-loaded interest rate hike may be more effective. Former Central Bank Chief Economist Hakan Kara wrote in a post on his X account, “For the interest rate hike to be more effective, it needs to be front-loaded and strong. The Central Bank has started taking the right steps with the new members gaining a majority in the MPC. I think that a 750 basis point interest rate hike at the September meeting will be more effective and less costly than a 500 basis point hike.”