The Central Bank (BC) is expected to increase the policy rate by 100 basis points at the Monetary Policy Committee (MPC) meeting next week, following an increase in inflation beyond estimates and the depreciation of TL by almost 10 percent since mid-February.
Nineteen of the 20 institutions that participated in the Reuters poll expect an increase in the policy rate. Only one economist expects the MB to keep the policy rate constant in March. The median expectation of the forecasts is that the policy rate will increase from 17 to 18 percent. Estimates of increase range from 100 to 300 basis points.
After increasing the policy rate by a total of 675 basis points in November and December, the CBRT, led by Naci Ağbal, kept the interest rate constant at 17 percent at the monetary policy board meeting in January and February. , until solid indicators were formed pointing to a permanent drop in inflation and price stability. He noted that it will remain for a long time, on the other hand, if necessary ‘additional monetary adjustment’ He said he would.
In the Reuters poll, the median expectation of 16 respondents who made predictions for the policy rate by the end of 2021 is 14.75 percent. Expectations for the end of 2021 are in the 14-18 percent band.
The central bank had set its year-end target at 9.4 percent in its inflation report. Although inflation beat expectations with 15.61 percent in February, the expectation is that the increase will continue until April.
Of the 18 respondents in the Reuters poll who predicted the timing of the first rate cut, nine are in the third quarter, eight in the last quarter and one expects the first cut next year.
In the survey conducted in February with the same number of participants, expectations of the first rate cut intensified in the third quarter of the year. In this survey, the timing of the first rate cut was found to be a little longer.
The Central Bank will announce its decision on the interest rate on March 18 at 2:00 p.m.