Turkish Central Bank Expected to Keep Interest Rate Unchanged at 37% Due to Forex Reserve Concerns

LootboxPhobia · 2026-03-12T13:33:34+00:00

Bank of America analysts expect the Central Bank of Turkey to maintain its policy rate at 37% unchanged at the monetary policy meeting, despite facing declining foreign exchange reserves and inflationary pressures. Analysts believe that future monetary pressures will be primarily influenced by oil prices, which could lead to interest rate adjustments.

LootboxPhobia

2026-03-12 13:33:34

Abstract generation in progress

Investing.com – U.S. bank analysts say that the Central Bank of the Republic of Turkey is expected to keep its policy rate unchanged at 37% at today’s Monetary Policy Committee meeting.

Turkey faces a challenging economic environment. As of this Monday, foreign exchange reserves have fallen by about $21 billion, not including the valuation effects of gold reserves. The inflationary pressures from the Middle East situation also add to the strain.

While these factors could support monetary tightening, U.S. banks believe that a rate hike is unlikely at this time. Daily forex margin data shows a slight decline, contrasting with the dollarization of margins following the March 2025 event.

The banking system has shifted to a liquidity shortage, allowing the central bank to provide financing to banks at an overnight lending rate of 40% after suspending the 37% one-week repurchase operations. This enables the central bank to better manage local interest rates, including deposit rates, without raising the policy rate.

However, analysts note that the Monetary Policy Committee may still choose to raise rates to create additional buffers for currency support.

As oil prices ease and the central bank maintains the USD/TRY peg by using reserves, Turkey’s forward rates have fallen from a peak of 47.3% for the three-month rate on Monday to about 10 percentage points lower.

U.S. bank analysts say that currency pressures in the coming weeks will largely depend on oil prices. UBS oil analysts forecast that Brent crude will average $80 per barrel in March. If the Middle East situation quickly eases, prices could drop to the mid-$70s. However, if disruptions in the Strait of Hormuz persist, Brent crude could rise above $100 per barrel later in March.

This article was translated with AI assistance. For more information, see our Terms of Use.

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.