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bne IntelliNews – ISTANBUL BLOG: Don’t bet for or against another rate hike in early 2022. Leave it to Erdogan

As world markets are well aware by now, Turkish President Recep Tayyip Erdogan opposed market orthodoxy, so there was no surprise on December 16 when the central bank’s monetary policy committee (MPC) announcement it had lowered its key rate by an additional 100bp to 14% despite official inflation of 21% and the ongoing collapse of the Turkish lira to lower regions never seen before.

“The cumulative impact of recent policy decisions will be monitored in the first quarter of 2022,” the MPC said in an accompanying press release. Well, now the financial industry just can’t accept the fact that there is a mercurial strongman at the helm who is carrying out an unorthodox economic experiment that mainstream economists have described as sheer madness, so Market participants have assumed that rate-setters note means that the MPC will now keep the key rate on hold throughout the first quarter of 2022 – but the wise observer can only conclude that, as regards Turkey under Erdogan , predicting what will happen next in the country and its economy, even with regard to the next 10 minutes, is downright impossible.

Take as big a pinch of salt as you can before soaking up the comments on what’s going on in Turkey. Stay away from rumors and experts and only rely on confirmed facts that you can confidently expose.

Observers should no longer need more experts warning that nothing comes as a surprise in Turkey as Erdogan appears to believe he can contain the economic chaos he is unleashing through the sheer force of his personality cult .

Getting back to the facts, however, an interesting aspect of the rate announcement’s build-up was that Finance Minister Nureddin Nebati’s last brother to hit Bull’s eye with its prediction a day ago of where the central bank would take the policy rate.

It’s even interesting by Turkey’s questionable standards. It’s a first. The brother, Seydullah Nebati, who is also a business partner of the finance minister, essentially released the rate decision a day before it was due.

Could he even have an idea of ​​when the central bank will or will not intervene in the forex market? It has been calm on this point since December 12, the last day during which the regulator intervened on the interbank market.

The all-time low for the Turkish Lira (TRY) against the USD, as recorded on December 16 following the rate news, stands, at the time of writing, at 15.748.

Notice that the horizontal barriers are still visible on the USD / TRY chart, even when the central bank has not officially intervened. The net exchange rate of state banks position is being watched.

As of December 13, this month’s net lira lending flow was TRY 42 billion.

Five-year credit default swaps (CDS) over Turkey have hovered above the 500 level.

On the global market front, the USD index (DXY) is around level 96.

On December 15, the Fed noted that it would reduce its monthly net money printing volume from $ 30 billion to $ 60 billion in January, from $ 90 billion in December. He plans to use identical cuts in February and March. Net money printing is expected to reach zero in April. The previous calendar, released in November, suggested zero in July rather than April.

The governors of the Fed, moreover, currently wait the delivery of three rate hikes in 2022 which will bring the key rate to 0.75-1.00% against 0.00-0.25% currently.

To note that approximately $ 1.7 trillion has already been printed. It is currently on the Fed’s balance sheet under the general treasury account (ATG) and reverse repurchase agreements (Recommended price) Account. When the Fed clears its net money printing volume, that money will continue to flow into the system.

On January 29, the Fed Release the results of its next meeting.

On January 3, the Turkish statistical institute TUIK will publish the country’s official report at the end of 2021 inflation figure.

On January 22, Turkey’s central bank Release its next pricing decision.

On the Turkish foreign policy front, not much is visibly happening. Domestically, the tension increases with prices.