The Monetary Policy Committee defied the ongoing pressures on the TL, and cut the policy rate (weekly repo) by another 100 bps today to 15% (simple), broadly in line with expectations, including ours. The statement ends with the following cryptic sentence: "The Committee expects that the transitory effects of supply-side factors and other factors beyond monetary policy’s control on price increases will persist through the first half of 2022. The Committee will consider to complete the use of the limited room implied by these factors in December."
We do not attribute much importance to this wording, however, and think that the CBRT will very likely continue with rate cuts in December as well, in line with the directives from President Erdogan, unless TL depreciation morphs into a financial panic and/or a depositor run.
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