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[PREVIEW] CBRT Policy Announcement due at 12:00 BST

The upcoming CBRT policy announcement is poised for high volatility, with a consensus expectation to hold rates at 37%, but significant uncertainty exists as some major banks anticipate a 300bps hike to 40%.

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[PREVIEW] CBRT Policy Announcement due at 12:00 BST

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  • Consensus is for the CBRT to hold rates at 37%, though some outlets also expect the bank to raise rates by 300bps to 40%, given the CBRT's erratic behaviour and political pressure; the outcome is not certain.
  • At its last meeting, the bank signalled a halt to its easing cycle by holding rates at 37%, saying global risk appetite had deteriorated and energy prices had risen amid geopolitical developments. Since that meeting, March inflation data came in softer than expected, at 30.87% Y/Y (prev. 31.53%) and 1.94% M/M (prev. 2.96%)
  • JPMorgan expects the bank to deliver a 300bps hike because of rising energy costs. JPMorgan cautioned that while the March inflation data was better than expected, the relief may prove temporary, with the analyst expecting price pressures to rebuild as energy costs accelerate. As such, the analyst raised the year-end 2026 inflation forecast to 28% from 26.4%. JPMorgan also revised its broader rate outlook, and now sees the year-end 2026 policy rate at 34%, up from a previous estimate of 32%. The bank does not expect rate cuts to begin before July 23, when the policy rate could be lowered back to 37%. Three additional cuts of 100bps each by year-end may then take effect, the note said.
  • Goldman Sachs also expects a 300bps hike to 40% amid elevated energy prices. Citi made a non-consensus call, saying in a note that the last meeting's statement adopted a "significantly more cautious tone" and that the bank was "signaling a more prudent policy trajectory".
  • Unlike Goldman Sachs and JPMorgan, Citi sees the most likely outcome for the CBRT as rates remaining at 37%, though it cautioned that a hike was possible "under certain conditions"
Context

The divergence in forecasts underscores the market's reaction to geopolitical pressures and inflation trends, notably the recent softening in inflation data which may not fully alleviate escalating energy costs. Traders should monitor potential shifts in rate guidance closely, as they could influence USD/TRY and broader emerging market sentiment significantly.

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