Turkey Macro Flash: CBT opts for another convoluted tightening

At the first MPC meeting of the year, the CBT kept both the interest rate corridor (3.5%-7.75%) and the one-week repo rate (4.5%) unchanged—an outcome which is in line with the consensus and our expectations. However, the CBT surprised the markets by announcing that interbank money market interest rates will materialize at 9.0% during additional monetary tightening days, instead of 7.75% (the marginal funding rate). This will be implemented through providing liquidity at 9.0% when deemed necessary. According to the Bank, the noted move aims at steering inflation toward the medium-term target.