ISTANBUL, April 22 (Reuters) - Turkey's central bank held its key interest rate at 37% on Wednesday, deciding not to hike but maintaining a cautious stance due to market fallout from the Iran war after U.S. President Donald Trump extended the ceasefire indefinitely.
In a Reuters poll, 19 of the 23 economists surveyed predicted no change to borrowing costs, while four forecast a rate hike. Before the regional conflict began shifting expectations, the central bank had been expected to continue a rate-cutting
cycle that began in late 2024.
The war-related surge in energy prices has rattled import-heavy economies like Turkey where inflation was 30.87% last month.
The central bank halted its easing in March, citing the conflict's potential impact on inflation. Since the war started, the bank has not opened one-week repo auctions, pushing the lira overnight rate up to 40% -- the upper band of its corridor.
Economists generally anticipate that rate cuts may resume in September.
Rising inflation expectations has led to an upward revision in year-end rate forecasts, with the Reuters poll predicting it be cut to only 32.75% by year end.
The median estimate for end-2026 consumer price inflation now stands at 27.53%, compared with 25.38% in the previous poll.
A year ago, the central bank temporarily reversed course and hiked rates in the face of political instability that rattled markets, though it returned to rate cuts by mid-2025.
(Reporting by Ezgi Erkoyun and Ece Toksabay; Writing by Daren Butler; Editing by Jonathan Spicer )
