We now expect the CBRT to raise its one-week repo rate by 400 bps to 19.0% on 20 July, having previously put our forecast under review. 

Despite some signs of economic slowdown, we expect the central bank to gradually adopt a neutral-to-hawkish monetary policy stance to address renewed Turkish Lira (TRY) weakness, a widening current account deficit and underlying price pressures.

The new central bank leadership has committed to achieving lower trend inflation and a significant improvement in the inflation outlook. Nevertheless, price pressure is likely to remain, with risks tilted to the upside, given elevated inflation expectations, ongoing currency weakness and a wider fiscal deficit.