CBRT to leave interest rates unchanged

The Central Bank of Turkey's (CBRT's) monetary policy committee (MPC) meets on Wednesday, 22 April.

The CBRT finds itself in a difficult position. With the real economy decelerating on most indicators, consumer confidence at a multi-year low, and leading indicators painting a dim future, the CBRT has embarked on an easing cycle. 

"We expect no change across the interest-rate complex", says Standard Chartered.

President Erdogan and his close advisers have pressured the central bank governor to cut interest rates, leading to market perception that Turkey's monetary policy has become increasingly disconnected from fundamental requirements.

In addition, amid an emerging-market (EM) sell-off and a stronger US dollar (USD) the Turkish lira (TRY) has repeatedly breached historical lows against the USD. It is now trading around USD-TRY 2.70, a 50% depreciation since the Fed hinted at a rate hike in May 2013.