New York Fed President John Williams Signals Rate Hold as Economy Seen Strong in 2026 
RBA Raises Interest Rates by 25 Basis Points as Inflation Pressures Persist 
U.S. Stock Futures Edge Lower as Tech and AI Stocks Drag Wall Street Ahead of Key Earnings 
BOJ Policymakers Warn Weak Yen Could Fuel Inflation Risks and Delay Rate Action 
U.S. Stock Futures Rise as Investors Eye Big Tech Earnings and AI Momentum 
ECB’s Cipollone Backs Digital Euro as Europe Pushes for Payment System Independence 
Taiwan Urges Stronger Trade Ties With Fellow Democracies, Rejects Economic Dependence on China 
Oil Prices Climb as Middle East Tensions and U.S. Inventory Data Boost Market Sentiment 
Gold, Silver, and Platinum Rally as Precious Metals Recover from Sharp Selloff 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
ECB Signals Steady Interest Rates as Fed Risks Loom Over Outlook 
Bank of Canada Holds Interest Rate at 2.25% Amid Trade and Global Uncertainty 
Japan Finance Minister Defends PM Takaichi’s Remarks on Weak Yen Benefits 
China and Uruguay Strengthen Strategic Partnership Amid Shifting Global Order 
The central bank of Turkey (CBT) is expected to hike the overnight lending rate in the monetary policy meeting scheduled to be held today. Yesterday’s assassination of the Russian ambassador highlights the laws of unintended consequences; however, markets did not react significantly to it.
Consensus expectations are for the CBT to hike overnight lending rates by 25 basis points to 8.75 percent at today’s meeting, leaving the repurchase rate and the overnight borrowing rate unchanged at 8.00and 7.25 percent respectively, Commerzbank reported.
USD/TRY illustrates a 20 percent appreciation since September, which is a reflection of the stronger USD and deteriorating sentiment towards EM. The lira and lira denominated assets would underperform once sentiment towards EM worsened and this proved to be the case. 2-year rates currently trade around 11 percent, which illustrates the depth of market scepticism towards CBT.
As long as CBT remain reluctant to hike rates the lira will feel the pain. CBT might feel they can get away with negligible rate hikes but they are ignoring the paradigm shift in US rates and the USD. The longer this goes on, the worse it will get for the lira and eventually CBT will have to undertake emergency rate hikes of around 250–300 bps.
"We’ve seen this cycle play out so many times in the past it’s actually become boring. If CBT are serious about reining in lira weakness it will require a durable positive real interest rate profile of around 2.5-3.0 percent. CBT need only look north and see what CBR achieved in the last few years," the report mentioned.
