The Central Bank continues to hike market rates indirectly. The recent action is aimed to direct banks more to the late liquidity window (LLW) by not making funding through the BIST Repo-Reverse Repo channel, thus increasing the weighted average funding cost faster. Considering that the market rates will converge to 14.75% by using LLW predominantly, the actual tightening continues. After the meeting, which that the CBRT did not increase the policy rate and signaled that it would continue using the LLW with market funding, the predominant opinion is that the interest rate corridor does not point to a permanent tightening. At the same time, the gap between the interest corridor and market funding may be due to the Central Bank's desire to provide rapid easing flexibility to support credit expansion at the first opportunity. Therefore, the markets gave a negative surprise reaction to this.
The Central Bank will hold its next meeting on November 19th. We think that the policy steps should be taken proactively and convincing the market, while at the same time strengthening the real interest position.
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Hibya Haber Ajansı