The Turkish central bank is widely expected to keep its interest rates steady at the upcoming policy meeting on Thursday in response to the tense geopolitical situation and global market fallout, recent polls showed.
The Central Bank of the Republic of Türkiye (CBRT) would thus halt its easing cycle and hold interest rates at 37%, most economists polled by Anadolu Agency (AA) and Reuters anticipate.
All 10 economists polled by Reuters forecast that the bank will hold the benchmark rate on March 12. Similarly, a vast majority of economists in a poll by AA also expected that the CBRT would hold rates steady, with only one forecasting a small 50-basis-point cut.
Before the expanding regional conflict began shifting market expectations, the bank had previously been expected to continue an easing cycle that began in late 2024.
A year ago, the central bank temporarily reversed course and hiked rates, though it returned to rate cuts by mid-2025.
This week's shift in market expectations also led to an upward revision in year-end rate forecasts. The median estimate for end-2026 now stands at 29.75%, compared with 28% in the previous Reuters poll, while some economists declined to make predictions for now.
JPMorgan, which, like most analysts, had previously predicted a cut at the March meeting, said on Monday it now expects the bank to hold and also revised its year-end forecast to 31% from 30%.
HSBC also forecast a hold, noting the Monetary Policy Meeting (MPC) has repeatedly said the easing cycle will be cautious and data‑dependent.
"We think that in the context of significant geopolitical uncertainty and growing energy price risks, an on‑hold decision is the most likely outcome," HSBC said in a research note.
Türkiye's inflation rate rose slightly on an annual basis to 31.5% in February, while the monthly figure cooled to 2.96%, compared to the higher-than-expected 4.84% increase in January, official data revealed earlier this month.
The central bank, at its first quarterly inflation report last month, lifted its year-end inflation forecast to the 15%-21% range, while keeping its interim target at 16%.
CBRT Governor Fatih Karahan, at the time, emphasized progress on disinflation and suggested that policymakers "are decisively maintaining our tight monetary policy stance to ensure the continuation of the disinflation process in line with targets."
"We stand ready to tighten our monetary policy stance in case of a significant deviation in the inflation outlook from the interim targets," he also said.
However, since the U.S.-Israel attack on Iran and its retaliatory aerial attacks, exports from major Gulf oil producers have largely halted, causing a sharp rise in energy prices and stoking supply and inflation concerns on a global scale.
Market volatility triggered by the conflict prompted Treasury and Finance Minister Mehmet Şimşek to convene the Financial Stability Committee, which said it would take all necessary steps to ensure market functioning and contain the fallout.
Turkish institutions have meanwhile issued temporary proactive measures, including liquidity steps that helped push the overnight rate roughly 300 basis points higher to about 40%.
At the same time, Ankara on Thursday announced that the so-called "sliding scale system" was temporarily activated to mitigate the impact of the perceived temporary increase in oil prices.
Economists said that one key factor limiting upward revisions in inflation expectations was this system, which adjusts the special consumption tax (ÖTV) on fuel products and prevents higher oil prices from being fully passed through to consumers.
The central bank will announce its next interest rate decision at 11 a.m. GMT (2 p.m. local time) on March 12.
