The Central Bank of Türkiye has gone fully conventional by delivering a cumulative 3,250 bps of policy tightening since the new Treasury and Finance minister, and CBRT governor Hafize Gaye Erkan were installed after the spring election. The policy rate has been raised dramatically from 8.50% pre-election to 40.0% in November, and another layer of policy restraint may be added today.

Our house view calls for a terminal rate of 45.00%, so another two 250 bps hikes, today and one more in January 2024.

We do not think the TRY is out of the woods and further depreciation towards 35.00/USD is possible next year (EUR/TRY 40.00).