CBT likely to keep policy rates unchanged, inflation may peak in April

The Turkish central bank is expected to keep its policy rates on hold, while hinting that it might carry on keeping liquidity conditions tight given the high level of inflation, according to a Barclays research report. Inflation in Turkey is expected to peak in April, closer to 12 percent and is expected to fall beginning in June, added Barclays.

The Central Bank of Turkey had also stated earlier last week that it projects inflation to peak in April. The central bank, ultimately, is expected to resume simplification for transition to a single policy rate that will eventually be below the current effective cost of funding.

“As much as the CBT’s continued emphasis on its preference for a simplified and predictable framework, we think this is also driven by the motivation of the authorities to facilitate a gradual shift away from FX financing towards TRY-denominated financing for the corporate sector”, noted Barclays.