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The central bank, which pushed markets back by raising interest rates by 2 points in September, will meet again on Thursday and make another interest decision.
The general expectation in the markets is to increase interest rates by 1.75 – 2 points from 10.25 percent to 12 percent or 12.25 percent.
-Normally, if such an increase occurs, the interest on the policy will be close to the real interest rate. As of yesterday, the weighted average interest rate of the money that the Central Bank gave to the banks increased to 12.39 percent.
Therefore, if an increase is made as expected, the interest will not actually increase. The current level will be recorded as policy interest. The fact that the policy rate lags behind and follows the market, of course, also indicates that the door is open to go up.
AN IMPORTANT SIGN IS COMING
-It is an important signal that the exchange rate begins the week in which a critical decision is made about the interest rate, instead of increasing stress or even loosening up.. Added to this, the rapid appreciation of banks in the stock market can complement the picture.
–If it continues to relax in the currencies comes Thursday Couldn’t the Central Bank raise the interest rate? Because the biggest reason for the surprise rate hike at last month’s meeting was the rise in exchange rates.
Find the answer to this It is necessary to know the reason why the exchange rate fell. If the rate hike is priced in advance, the meeting approval can be reversed, the rate can bounce again.
If the currency drop is based on other expectation and information that will increase the supply of currency, it is different. But this information is supposed to leak out to the market, and then why would markets expect an interest rate increase?
PREPARING TO INCREASE INTEREST?
It’s as if relaxation occurs in the wolf here “The Central Bank increased the interest rate, but it did not completely block the exchange rate, it will do it again” It is based on advance pre-sale.
– Like the start of a strong currency sale between a quarter and 14 hours before the end of the CBRT meeting on September 24.
-Now, 3 days before the meeting, the interest rate hike expectation is well established and when the dollar rate is above 7.90, they are making a similar move. They will be profitable when interest rates rise and the exchange rate is withdrawn. The desire to hit the rate at the top and switch from foreign currency to TL and another instrument may have started to affect the markets as of yesterday.
NO SURPRISE, PROBLEM?
– As expected, if the interest rate does not increase, the markets will deteriorate. Or the markets will be guided by smaller steps up to the date of the meeting, and you will be prevented from getting into the wrong lane and largely reacting to reality.
-If the interest increase penetrates the prices beforehand and loosen the rate, What happens if a decision goes as expected? Is it any surprise? If not, will the markets go to profit realization this time?
In such a situation The explanation of the interest rate decision of the Central Bank is verified. Do you have an attitude, expression, or implication regarding interest or monetary tightening?
In addition, explanations of economic management are reviewed. Is it compatible with the step taken by the Central Bank, supporting and reinforcing the decision? Or is it stronger than the rate decision?
In this sense, it is necessary to assume that Thursday’s interest rate decision is now of limited importance. Why Since the price trend has been introduced beforehand, the surprise effect has decreased significantly.
THE IMPORTANCE OF MEASURES THAT ARE NOT OF INTEREST
-However, a surprise effect can be created by going beyond expectations and not increasing the interest rate or increasing it more than expected. But these options are unlikely.
The positive effect of the expected interest rate hike depends on non-interest-related measures.
– In the absence of an increase in interest rates, the determination of non-interest-related measures will be much more important.
– Both to ensure the permanence of the positive results of the interest decision and to cover the gap that may arise in the option of a small increase in interest rates Attention will be paid to uninteresting measurements.
-Let’s look at the interest rate from this point of view, focusing on what has been done other than the real interest, what measures have been taken and the decisions and statements that will support the interest.
–If interest arises as a single measure, we repeat the spiral every month and after a while the rise in interest rates will lose its effect.
