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Bond Market News
Turkey Hikes Rates by 500bp to 40%
November 24, 2023
Turkey’s central bank hiked its policy rates by 500bp to 40%, well above expectations of a 250bp hike. The move was seen as an effort to tackle high inflation and a depreciating lira. Inflation in Turkey was seen at 61% in October and the currency has fallen by 35% against the dollar. “Really impressive move by the CBRT – probing their orthodoxy and getting well ahead of expectations. These guys and girls are serious about fighting inflation. We need to give them credit for that”, said Timothy Ash, EM strategist at BlueBay Asset Management. The monetary policy committee (MPC) signaled that it would slow down the pace of monetary tightening and that the “tightening cycle will be completed in a short period of time”. The policy rate has gone up 30% since President Erdogan’s re-election in May this year.
Turkey’s dollar bonds were trading slightly higher – its 5.875% 2031s were up 0.2 points to 87.5, yielding 8.12%.
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