Turkey likely to keep rate unchanged this week

Turkey’s central bank is expected to maintain its key interest rate at 45 per cent this week, according to a Reuters poll on Monday.

The Central Bank of the Republic of Turkey (CBRT) has recently tightened policy, including raising the maximum interest rate on credit card cash withdrawals.

Most economists predict no change in the policy rate this month, with some expecting a hike later in the year.

Finance Minister Mehmet Simsek has pledged tighter fiscal policy to help reduce inflation, with additional measures planned if needed.

The central bank has raised its key rate from 8.5 per cent to 45 per cent since June, moving away from a low rate policy.

Capital Economics warns of a possible return to rate hikes due to setbacks in the disinflation process.

Goldman Sachs expects a 250 basis-point rate hike this week to address pressure on reserves and the lira. The central bank’s own inflation forecast is lower than market expectations. The rate decision will be announced on March 21 at 1100 GMT.