Ahead of the interest rate decision announcement by the Turkish Central Bank on Thursday, Mario Schmölling, an analyst from DZ Bank Research, stated that given Turkey’s recent acceleration in inflation, a “substantial rate hike would be appropriate,” and failing to do so could lead to further depreciation of the lira.
He mentioned that the market widely expects rates to be raised by 250 basis points to 20%.
Schmölling noted that concerns about Turkey’s monetary policy being “excessively loose” have intensified after the Turkish Central Bank failed to raise key rates as expected by the market in two consecutive instances.
He stated, “If the Turkish Central Bank fails to hike rates as expected at least in this meeting, the already battered lira is likely to face selling pressure once again.”
