CBRT will most likely keep rates unchanged

Turkey's central bank (CBRT) holds its next Monetary Policy Committee (MPC) meeting on 20 May. It may keep all rates unchanged, with the policy rate (one-week repo rate) at 7.50% and the interest-rate corridor intact, including the crucial upper band (overnight lending rate) at 10.75%. Owing to jitters related to the lira (TRY) and Turkish assets in general, the CBRT has been more hawkish in its actions than its statements. 

The policy bias has been much tighter than the official policy rate of 7.50%, with the interbank rate close to the top of the maximum funding rate of 10.75%. In recent days, the TRY has retraced somewhat, supported by a weakening US dollar, as well as investors becoming slightly more optimistic about the outcome of Turkey's crucial June elections.