The economists surveyed on Bloomberg are pencilling in 250 bps to 500 bps of rate hikes today and the median consensus is for a 500bp hike to 35.0%. Our house call is for a smaller 300 bps hike today to be followed by more, as we see the key rate rising all the way to 40% by 1Q24. 

On the tightening front, the CBRT underdelivered twice in June/July, over-delivered in August and was in line in September, so with such widely negative real yields, we don’t think the quantum of hikes will change the outcome of more lira weakening yet to come. 

We expect the Lira to further weaken and USD/TRY to be around 34.00 in the next 12 months.