Central Bank expected to maintain cautious stance in short term

ISTANBUL

Foreign banks have updated their expectations after the Central Bank of the Republic of Türkiye (TCMB) last week decided to keep its policy rate unchanged at 37 percent.

Analysts noted that while the decision aligned with market forecasts, the tone of the statement from the Central Bank on March 12 was more hawkish than anticipated, signaling caution amid rising geopolitical and energy-related risks.

JPMorgan described the move as consistent with expectations but emphasized that the central bank’s communication left the door open to a possible rate hike at the April 22 meeting. The investment bank withdrew its earlier forecast of a 100 basis point cut, now predicting that rates will remain steady next month.

Citigroup economists highlighted a clear shift in the TCMB’s policy stance, noting that the central bank has moved away from its previous easing bias toward a more cautious framework. Citi expects the Monetary Policy Committee to “skip” any changes in April, maintaining the current rate.

Goldman Sachs analysts pointed to the ongoing conflict in Iran and elevated energy prices as potential triggers for renewed tightening. They suggested that under such conditions, a 300 basis point hike at the April meeting could not be ruled out.

HSBC, in its post-decision assessment, revised its inflation forecast for Türkiye. The bank now expects year-end inflation in 2026 to reach 23 percent, up from its previous estimate of 21 percent. The revision was attributed primarily to higher energy costs driven by Middle Eastern conflicts.