Rates To Stay On Hold

We hold to our view that the Central Bank of the Republic of Turkey (CBRT) will maintain its policy rate at 16.75% through the remainder of the year. That said, on the back of the marked depreciation of the lira in October, the short-term risks have shifted clearly to the upside, with the CBRT unlikely to rule out monetary tightening to defend the currency. The lira's record low level of TRY1.7580/US$ will be key to watch, with a downside push toward this point further elevating the risks of an emergency rate hike.

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