Türkiye keeps rates on hold

Türkiye’s central bank held rates unchanged at its meeting of the monetary policy committee this week, keeping the one-week repo rate at 46%. The rates corridor was also maintained at 44.5%-49%. The bank noted that inflation eased in May and was likely to do so in June while there was a slowdown in domestic demand in the second quarter. In its statement accompanying the decision, the TCMB said that “policy tools would be used effectively” if there was a “deterioration in inflation,” giving policymakers some room to be able to adjust rates lower.

The Bank of England held rates unchanged, voting 6-3 on the monetary policy committee in favour of the hold. The dissents to the majority supported cutting rates to 4%. The BoE said it expected a “significant slowing” of wage pressures this year and that consumer prices will hold close to current levels over the rest of 2025. In its statement the Bank said that the future path for monetary policy needed to be “gradual and careful”

The Swiss National Bank cut its policy rates by 25bps to 0% in response to the low inflation in the country while SNB president Martin Schlegel said that the bank could “be active in the foreign exchange market as necessary.” Inflation in Switzerland has moved negative in May, with the CPI index falling by 0.1% y/y.

Data from UNCTAD showed the UAE attracted USD 45.6bn of FDI flows in 2024, up almost 50% year/year and the largest destination for FDI flows across the Middle East and North Africa. Inflows into Saudi Arabia dropped by 31% to USD 15.7bn while FDI into Turkey’s economy was steady at USD 10.6bn. Elsewhere the World Bank revised its UAE growth outlook higher by 0.6ppts to 4.6% in 2025 and to 4.9% in 2026, up 0.8ppts. For Saud Arabia the World Bank cut their growth outlook for 2025 to 2.8% while expecting 4.5% next year.

Today’s Economic Data and Events

10:00 UK retail sales May: forecast -0.7% m/m

18:00 EC consumer confidence June: forecast -14.9

Fixed Income

US Treasury markets were closed for a public holiday overnight and are trading sideways in early trading today.

FX

The US dollar pushed strongly higher against peers at the start of the day yesterday in response to statements from the US about whether or not it would become directly involved in the war between Israel and Iran. However, those gains were faded over much of the rest of the day. EURUSD managed to close higher by 0.1% at 1.1495 while GBPUSD gained 0.3% to 1.3465 even as there was a dovish tilt to MPC members on the Bank of England’s latest decision. Swiss franc also pulled relatively stronger, down 0.2% at 0.8168 while USDJPY touched higher by 0.2% at 145.45.

Emerging market currencies were softer overnight with USDINR up 0.3% at 86.735 while USDTRY added 0.3% to about 39.62.

Equities

US equity markets were closed for a public holiday. In Europe, the Euro Stoxx index was lower by 1.3% while the FTSE lost 0.6%.

In local markets the DFM dropped by 0.7% while the ADX was 1.1% lower. The Tadawul by contrast rallied by 0.2%.

Commodities

Oil prices have whipsawed in the last 24hrs with a 2.8% gain in Brent futures to USD 78.85/b overnight being largely unwound this morning as the prospect of US intervention in the war between Israel and Iran looks set to be delayed. WTI futures did not trade yesterday.