The Central Bank’s Monetary Policy Committee (PPK) kept the interest rate steady at 14% in an environment where annual inflation is approaching 70% and USD/TRY surged by over 10% in a month. One important change was made to the PPK statement while the market expected more interpretations and expressions about the disturbance and fight against inflation. “The collateral and liquidity policy actions, for which the review process is finalized, will be implemented,” the PPK added to its statement. The economic world emphasized that the phrase needs further explanation.
It’s relevant to point out that Central Bank Governor Sahap Kavcigolu stated at the second Inflation report meeting of the year that the liraization strategy was created with a holistic approach centered on TRY usage with collateral diversification and liquidity management implementations. Kavcioglu also added that they the government was aiming for the Central Bank’s liquidity transactions to be fully carried out in TRY and for a significant increase in the share of TRY in balance sheets.
The international credit rating agency Moody’s kept Turkey’s GDP forecast steady at 3.5% for 2022 and 4.0% for 2023. However, it revised the year-end inflation projection from 35.0% to 52.1% for 2022. Its inflation estimation remained at 30.0% for the end of 2023. Moody’s is expected to release Turkey’s credit rating this evening.
The Turkish and French presidents discussed Sweden and Finland’s bids to join NATO, according to the Communications Directorate. Sweden and Finland’s contact with individuals and institutions affiliated with the PKK/YPG terror group contradict the NATO alliance spirit, President Recep Tayyip Erdogan told his French counterpart Emmanuel Macron over the phone. Regional developments, including the ongoing war between Russia and Ukraine, were also discussed during the phone call.
The price of gasoline and diesel fuel has been raised by TRY 1.43 and TRY 1.38 per liter, respectively, due to the surge in oil prices and foreign exchange rates.
DAILY AGENDA
No important data will be released this morning.
Meanwhile…
>> Foreign investors’ net equity, government debt securities (GDS), and corporate bond outflows from Turkey totaled USD 603.2m, USD 67.3m, and USD 1.9m respectively, in the week ending on May 20, according to the Central Bank. Thus, the total outflow reached USD 672m.
>>The Central Bank’s international net reserves declined by USD 1.96bn to USD 9.56bn in the week ending on May 20, compared to the previous week. The bank’s total reserves fell by USD 1.68bn to USD 101.94bn in the same period.
>> Residents’ FX deposit accounts decreased by USD 1.04bn in the week ending on May 20, compared to the previous week, according to the parity adjusted data of the Central Bank.
>> The total amount in FX-protected TRY deposit accounts reached TRY 874.75bn in the week ending on May 20, according to the Banking Regulation and Supervision Agency (BDDK).
>> The loan volume of the banking sector rose by TRY 119.12bn from TRY 5.77tr to TRY 5.89 in the week ending on May 20, compared to the previous week, according to BDDK.
