All 15 economists surveyed by Reuters are of the opinion that interest rates will be kept constant at the Monetary Policy Council (PPK) meeting in May.
2 out of 8 participants who made claims for the end of the year predict that the CBRT will have to increase interest rates before the end of the year. One of the economists participating in the survey claimed that the political interest rate would rise to 15 percent at the end of the year, while another participant predicted that it would be increased to 20 percent.
The expectations of economists show that the peak in inflation, which has reached the highest level in 20 years, is not seen now and that the rise may continue for a few more months, but many of the participants in the survey still expect that no interest will be reflected due to the low interest determination within the framework of President Tayyip Erdoğan’s economic program that prioritizes production and exports.
At the end of last year, the CBRT gradually lowered the policy rate by 500 basis points to 14 percent, in line with the demands of Erdoğan, who argued that the interest rate causes inflation.
While the loosening cycle caused the exchange rate crisis and indirectly led to a sharp rise in inflation last year, the rising global power costs after Russia’s invasion of Ukraine in February further fueled price increases.
Despite the rise in inflation, the CBRT did not change the policy rate in its last four meetings. The bank did not give any signal that it might change interest rates later.
Some economists, on the other hand, choose not to participate in the surveys in recent months due to the unpredictability of the CBRT’s decisions.
The currency crisis triggered by the easing cycle last year carried the TL’s losses against the dollar to 44 percent in 2021, which fueled inflation due to rising import prices. The TL, which had been in a narrow band for a long time due to Russia’s attack on Ukraine, lost about 18 percent against the dollar this year, led by the global developments in the financial markets.
The CBRT will announce its interest rate decision at 14:00 today.