Page 24 - bne_newspaper_February_02_2018

24 I Companies & Markets bne February 2018
Guess the writing was on the wall this week with Erdogan's statement criticising rate hikes.
“Look, here are the basics – real GDP growth was at 11.3% y/y for Q3, inflation is just short of 13% with the central bank target at 5%, the current account deficit is at $40bn+ and widening, and the quality of financing is poor/deteriorating. What does the central bank of Turkey see that everyone else does not?”
In a separate note to investors after the rate hike announce- ment, Ash said: “It’s been notable in recent weeks that we have
“The Turkish lira’s all-time low came on November 22 when the currency sank to 3.9826”
seen locals on the bid again for FX, with foreigners going the other way, assuming that the central bank would do the decent thing and tighten.”
Following its monetary policy committee (MPC) meeting, the central bank also announced it was leaving the benchmark repo rate at 8%, the overnight lending rate at 9.25% and the overnight borrowing rate at 7.25%. Given the current inflation rate all four of its real interest rates therefore remain negative.
Seventeen of 18 economists in a Reuters poll had predicted the late liquidity window rate would be raised. Their average forecast was for an increase of 100 basis points. Six economists had forecast the overnight lending rate would be raised 25 to 100 basis points.
Just two days before the MPC meeting, Erdogan reiterated his stated belief that inflation will not fall in a country with high interest rates.
The overheated state of Turkey’s economy is widely blamed on overlending. The government has caused a credit binge by various government stimulus measures including a credit guarantee fund aimed at backstopping loans for businesses, and tax cuts aimed at boosting consumption. Many of the measures were brought in after the country experienced
an economic blip following the July 2016 attempted coup.
After releasing its rates decision, the central bank put out
a bland statement that was much the same as the one issued after the previous MPC meeting, reading: “A tight stance
in monetary policy will be maintained decisively until the inflation outlook shows a significant improvement and becomes consistent with targets.”
QNB Finansbank chief economist Gokce Celik told Reuters: “Tur- key’s risks (diplomatic tensions with the EU and US) will contin- ue to pressure the exchange rate and a 12.75% interest rate will be insufficient to protect the Turkish lira against these risks.”
February 22, 2018, Prague
Cbonds CEE Bond Conference
Cbonds CEE Bond Conference is going to become a special unique event, dedicated to the bond markets in Central and Eastern Europe.
Expected number of participants: 150.
Countries breakdown: CEE countries, Western Europe, the UK, Russia & CIS.
Sector breakdown: buy-side, investment banks, universal banks, bond issuers, infrastructure.
Sponsorship:
Main topics to discuss:
• Macroeconomic and CEE fixed income analysts panel
• Institutional investors panel • DCM panel
• CEE countries bond markets • High-yield panel
Contacts
Participation:
Sergey Zobov: szobov@cbonds.info, Ksenia Ardelyan: ka@cbonds.info +7 (812)336-97-21 *103 +7 (812) 336-97-21 *132
www.bne.eu