Central Bank of Turkey likely to hike rate in December - Barclays

The Central Bank of Turkey is set to meet during this week. According to a Barclays research report, the Turkish central bank is expected to hike the Late Liquidity Window O/N lending rate by 100 basis point on Thursday. Recent, the central bank had hinted at a policy action, as it has tightened liquidity conditions by pushing the Weighted Average Cost of Funding to 12.25 percent from 12 percent.

The rise in the WACF suggests a high probability of rate hike. The central bank’s action was also followed by President Erdogan’s chief economic advisor, Cemil Ertem’s hawkish statement. Also a sharp rise in inflation in November has also reinforced the case for a hike.

“Overall, we expect the CBT to push the WACF rate above 13% at the December MPC. Policy action may also be delivered as a combination of hikes in several policy rates, but the biggest hike will likely be in the LLW O/N, where we expect a 100bp increase”, added Barclays.

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