Foreign analysts predict Türkiye will refrain from interest rate cuts this year

ISTANBUL

Foreign analysts said the Turkish Central Bank may refrain from rate cuts this year, while investors may seek reassurance that it will maintain its tight monetary policy.

The bank may leave the policy rate unchanged at 45% after its latest Monetary Policy Meeting on Thursday, Marek Drimal, Societe Generale's central and eastern Europe, Middle East and Africa strategist, told Anadolu.

Saying that experts expect verbal and written confirmation of the bank's aim to keep the policy rate at 45% as long as necessary, Drimal said that this may mean avoiding interest rate cuts for the rest of the year.

Drimal noted that there may be increases in the US dollar/Turkish lira rate.

However, the USD may weaken in global markets and Türkiye's current account balance may improve due to seasonality, Drimal said, adding that the lira may gain value significantly in the second quarter after the country’s March 31 local elections.

Piotr Matys, In Touch Capital Markets' senior FX analyst, also predicted that the Central Bank will leave the policy rate unchanged at 45%.

Matys added that investors may seek assurances that the bank will maintain its tight monetary policy until inflation is in line with the target.

All economists taking part in an Anadolu survey last week said they expected the bank to leave the policy rate unchanged.

The median of economists' year-end policy rate expectations was 36.25%.

*Writing by Gokhan Ergocun​​​​​​​