Page 12 - TURKRptMar22

● April 4: Official inflation for March.
● March 17: Monetary policy committee (MPC) meeting decision at 14h
(?) Istanbul time. February 17: Hold at 14%.
If the speculation suggesting that Erdogan wants a monthly mortgage rate of 1% proves correct, a 12% policy rate (banks’ funding cost) would be below the annual compound rate of about 13% that the 1% monthly rate implies.
Some speculation suggests that Erdogan wants a single-digit policy rate.
January 20: Hold at 14%. December 16: Cut by 100bp to 14%. November 18: Cut by 100bp to 15%. October 21: Cut by 200bp to 16%. September 23: Cut by 100bp to 18%.
● Lira loans flow: From December 20, monetary conditions in Turkey were tightened even though the policy rate has been kept on hold.
From the second half of January, the Erdogan regime again started utilising the public banks to ease monetary conditions.
The capital of the public banks were hiked (via the circulating of some government papers among the Treasury, Turkey Wealth Fund (TWF/TVF) and the banks again).
The government has also been talking about pumping some TRY60bn into the economy via the Credit Guarantee Fund (KGF).
Turkey generally eats TRY60bn worth of loans for breakfast. Each time the loan pump begins with “targeted” and “limited” labels.
In mid-February, monetary conditions on the market again entered into an easing trend. Net lira creation via loans reached TRY123bn in February, the highest figure recorded since the all-time high TRY141bn in April 2020.
After the pumping in of around 100bn of lira loans in both November and December, net lira creation remained high at TRY59bn in January.
More lira loans mean more FX demand.
12 TURKEY Country Report March 2022 www.intellinews.com