This Might Be the Last Rate Hike by the Central Bank This Year.
The CBRT has two choices ahead before its rate decision, however, one condition has to be met: “Finishing the year with 35% policy rate.”
Once this condition is met, the task becomes easier. The Central Bank was expected to implement the 500-bps hike either at once or gradually. Turkey had been following a moderate foreign policy for a long time due to fund scarcity, and when it became clear the government embraced a new approach after President Erdoğan’s speech, the CBRT officials wanted to stop the market volatility with a big rate hike, as seen in their latest press release.
The government was expecting a fund inflow since June. When the expected funds did not arrive, they had to back down from some of the undertakings they had started in case the funds in question may arrive anytime. And this has obviously caused some reaction in the markets. The President’s statement, “We do not owe Israel anything,” was noteworthy in this aspect. This statement, said by taking into account the fact that even the arrival of those funds from the Gulf countries depends on Turkey’s attitude towards Israel, in terms of keeping good relations with it, was also a warning to our economy officials. Since the outbreak of the Israel–Hamas war, Turkey has been pursuing a peaceful policy. But when it was denied to be included in peace negotiations for the Middle East, Turkey had to express a strong stance.
Meanwhile, the Hungarian parliament has, quite cleverly, rejected to hold a vote on Sweden’s NATO accession. After this delay by the Hungarians, the Turkish parliament is now in the spotlight. This situation might turn into something resembling to the “1 March mandate”, proposed by the government to the parliament for sending armed forces to foreign countries or having foreign armed forces in Turkey. Let’s remember that this mandate was rejected in the general parliamentary assembly. The result of this voting will definitely put us in a different position with the US, NATO, EU and Israel quartet.
