Macro and Politics
Tacirler Investment
* The CBT will release its international reserves and FX liquidity data for the week of 6–13 March today at 12:00 local time. Our calculations based on the analytical balance sheet suggest that the decline in reserves has continued, albeit at a slower pace compared to the first week of the conflict. Accordingly, we estimate that gross FX reserves fell by a further USD8bn to below USD190bn, while net FX reserves declined by USD10.3bn to USD68.3bn. We expect today’s official data to broadly confirm a similar magnitude of decline. The weekly portfolio flows as well as money & banking, which are typically released alongside the reserve figures, will instead be published on Monday, 23 March at 14:30 local time due to the holiday schedule.
* The minutes of the Monetary Policy Committee’s (MPC) 12 March meeting have been released. As a reminder, the CBT kept the policy rate unchanged at 37% in March and left the interest rate corridor (35.5%–40%) intact. However, the suspension of weekly repo auctions as of 2 March and the shift in liquidity management pushed the effective funding rate to around 40%, implying a meaningful operational tightening without a formal rate hike. Market rates have effectively settled at the upper bound of the corridor. The minutes highlight the increase in Brent crude and other energy prices in early March, while noting that the échelle mobile mechanism has significantly limited the pass-through to consumer prices. Nonetheless, risks to energy and raw material supply continue to exert upward pressure on costs. Domestically, energy price increases—led by fuel—are partly contained by this mechanism, while services inflation is driven by transportation (particularly air travel) and education. Core goods remain relatively moderate, but commodity price volatility continues to elevate uncertainty. Overall, the minutes point to a clear intensification of upside risks to the near-term inflation outlook, suggesting that the CBT will maintain a tight stance via liquidity and macroprudential tools. We do not yet assign a high degree of confidence to a resumption of rate cuts at the 22 April meeting; instead, maintaining the current degree of tightness—and, if needed, additional tightening—remains the more likely path. We expect the CBT to keep effective tightening elevated and to consider rate cuts only once supply-driven pressures show more durable normalization. Our year-end policy rate forecast stands at 29.5%, with risks skewed to the upside.* The CBT will release its international reserves and FX liquidity data for the week of 6–13 March today at 12:00 local time. Our calculations based on the analytical balance sheet suggest that the decline in reserves has continued, albeit at a slower pace compared to the first week of the conflict. Accordingly, we estimate that gross FX reserves fell by a further USD8bn to below USD190bn, while net FX reserves declined by USD10.3bn to USD68.3bn. We expect today’s official data to broadly confirm a similar magnitude of decline. The weekly portfolio flows as well as money & banking, which are typically released alongside the reserve figures, will instead be published on Monday, 23 March at 14:30 local time due to the holiday schedule.
* The minutes of the Monetary Policy Committee’s (MPC) 12 March meeting have been released. As a reminder, the CBT kept the policy rate unchanged at 37% in March and left the interest rate corridor (35.5%–40%) intact. However, the suspension of weekly repo auctions as of 2 March and the shift in liquidity management pushed the effective funding rate to around 40%, implying a meaningful operational tightening without a formal rate hike. Market rates have effectively settled at the upper bound of the corridor. The minutes highlight the increase in Brent crude and other energy prices in early March, while noting that the échelle mobile mechanism has significantly limited the pass-through to consumer prices. Nonetheless, risks to energy and raw material supply continue to exert upward pressure on costs. Domestically, energy price increases—led by fuel—are partly contained by this mechanism, while services inflation is driven by transportation (particularly air travel) and education. Core goods remain relatively moderate, but commodity price volatility continues to elevate uncertainty. Overall, the minutes point to a clear intensification of upside risks to the near-term inflation outlook, suggesting that the CBT will maintain a tight stance via liquidity and macroprudential tools. We do not yet assign a high degree of confidence to a resumption of rate cuts at the 22 April meeting; instead, maintaining the current degree of tightness—and, if needed, additional tightening—remains the more likely path. We expect the CBT to keep effective tightening elevated and to consider rate cuts only once supply-driven pressures show more durable normalization. Our year-end policy rate forecast stands at 29.5%, with risks skewed to the upside.