Eyes turned to the Central Bank for the interest rate decision in May. According to market participants, the Central Bank of the Republic of Turkey will remain inactive at the interest rate meeting to be held this week.
The median expectation of 18 institutions participating in the survey conducted by the Bloomberg HT Research Unit was that the policy rate would remain constant at 14 percent.
14 institutions that shared the year-end claim also predicted that interest rates would remain unchanged until the end of the year, at 14 percent. In its year-end claims, only one institution shared the assumption that the policy rate would be raised to 15 percent.
INFLATION RESISTED TO 70 PERCENT
The latest data showed that the upward momentum in inflation continued. According to the information of the Turkish Statistical Institute (TUIK), annual inflation reached 70 percent in April.
Economists’ expectations show that the peak in inflation, which has reached its highest level in 20 years, is not seen now and may continue to rise for a few more months.
At the end of last year, the CBRT had gradually cut the policy rate by 500 basis points to 14 percent.
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.
Last year, the loss of value in TL, triggered by the loosening cycle, accelerated with the effect of the war, and this fueled inflation due to rising import prices. The dollar/TL, which has been in the narrow band for a long time due to Russia’s attack on Ukraine, rose by about 20 percent this year under the leadership of the global developments in the financial markets.