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On September 28, Turkey’s president, Recep Tayyip Erdogan, said during a televised interview that he was intent on the policy rate reaching the single digits by end-2022. Based on Erdogan’s guidance, the market expected a 100bp cut at each of the three MPC meetings that remained at the time he spoke.
Some Erdoganist business people, as well as some pundits, have lately spoken in favour of slashing the policy rate into the single digits without further ado and ending the constant talk of where rates will go. It seems that the MPC has decided to take the middle path.
● Lira loans flow
In June, net lira creation via loans broke a fresh record with Turkish lira (TRY) 229bn ($13bn). In July, a sharp decline was seen. In September, it surpassed TRY200bn again.
As of October 24, net lira creation via loans extended its record on an annual basis to TRY 1.65 trillion (The figure may decline if the amount of fresh loans falls below the amount of loan repayments in the remainder of the year). The previous all-time high stood at TRY711bn. It was recorded in 2020.
10 TURKEY Country Report November 2022 www.intellinews.com
