Hike rates

Wall Street banks are split on whether Turkey should hold or raise rates in 2022

People enter the headquarters of the Central Bank of Turkey in Ankara December 8, 2011. REUTERS/Sait Serkan Gurbuz

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LONDON, Jan 20 (Reuters) – Wall Street banks were split on what Turkey’s central bank would do after it left rates on hold on Thursday, with JPMorgan expecting it to remain on hold for the rest of 2022, but Goldman Sachs predicts a U-turn and a rate hike in the second quarter.

The central bank kept its key rate at 14% as expected, ending an unorthodox and aggressive easing cycle that triggered a currency crisis and pushed inflation to its highest level in 19 years at the end of Last year. Read more

JPMorgan said it expected policymakers not to be confused by the sharp rise in inflation, making tightening in the coming months quite unlikely.

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“We expect the CBRT to keep rates unchanged until the end of the year,” said JPMorgan’s Yarkan Cebeci.

However, Goldman Sachs predicted that with real rates deep in negative territory, the current policy mix is ​​unsustainable and would put the pound under further pressure.

“As a result, we continue to expect a reversal in monetary policy and a hike in the key rate,” Murat Unur said at Goldman Sachs.

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Reporting by Karin Strohecker; editing by Sujata Rao

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