Expectation of further increase in dollar TL rate: 20 central banks to announce decision on interest rates

Dollar / TL decreased from a peak of 14.75 to below 14 with yesterday’s intervention of the Central Bank (CBRT) in the direction of direct currency sales with an estimated amount of 2-2.5 billion dollars. The monetary policy decisions to be taken by about 20 global central banks, including the CBRT, in the markets will be monitored this week.

The possible impact of the Omicron variant on the economy on global markets and the possibility that the Fed will go for a tightening in monetary policy at its two-day meeting, which ends tomorrow, have reduced the risk appetite.

The Fed, whose two-day monetary policy meeting ends tomorrow, is expected to signal that it will bring forward a timetable for halting its program, in which it purchases $120 billion worth of bonds per month to combat high inflation. This move is also expected to open the door to rate hikes, by FED.

The European Central Bank (ECB), the Bank of England (BOE) and the Bank of Japan (BOJ) will also hold meetings this week. All three of the main central banks are expected to go for a tightening of their own monetary policies.

THE INTEREST RATE DECISION OF THE CBRT: THE MOST IMPORTANT ITEM ON AGENDA                                                                                                                         

In the domestic market, the CBRT’s decision on the interest rate that is expected to be discounted is being monitored as the most important agenda item of the week. Despite the high inflation and the consecutive sharp depreciation in the TL, as well as the beginning of tightening in similar countries, the CBRT seems to be determined to continue reducing interest rates. The CBRT has applied a 400 basis point rate cut in the last three months in the belief that the factors leading to an increase in inflation are temporary, and in its last PPK decision, it stated that it was considering using the limited space remaining in monetary policy in December.

The CBRT will announce the results of the last Monetary Policy Board (CBRT) meeting of the year on December 16, and the expectation is that it will cut the policy rate by 100 basis points.

Source: cumhuriyet.com.tr/ekonomi/dolarda-yeni-sok-beklentisi-20-merkez-bankasi-faiz-karari-aciklayacak-1892522