By Ece Toksabay
ANKARA (Reuters) – Turkey’s central bank will not trim its policy rate from the current 50% until the fourth quarter, a Reuters poll of economists showed.
It raised the rate by 500 basis points in March, following a February pause in its aggressive tightening cycle, citing a deterioration in the inflation outlook.
The bank has added 4,150 basis points to borrowing costs since June, reversing a low-rate policy championed by President Tayyip Erdogan to boost economic growth.
Policymakers have said a tight stance would be maintained until a significant decline in the underlying trend of monthly inflation is observed.
They will deduct 250 basis points in Q4 to put the rate at 47.5%. Next year will see further reductions and it will be 30.0% by end-2025, the poll showed.
Last week, central bank Governor Fatih Karahan told a panel in Washington the rate-hiking cycle is over and inflation is on track to reach its 36% target by end-year.
Economists expected inflation to average 44.2% this year, higher than 42.1% predicted in a January poll.
Turkey’s annual inflation rate climbed to 68.5% in March and is forecast to peak around 70% this quarter before falling in the second half of this year and through 2025.
Erdogan’s AK Party was ousted from mayoral seats in several provinces and thumped by the main opposition in Istanbul and Ankara on Sunday, its worst election loss since the AKP was founded more than two decades ago.
Voters punished Erdogan and his party largely over the cost-of-living crisis, AKP officials and analysts said.
Turkey’s economy was forecast to grow 3.0% this year and 3.3% next, the April 19-23 poll of 33 economists predicted. In January’s poll the respective forecasts were 2.8% and 3.5%.
(For other stories from the Reuters global economic poll:)
(Reporting by Ece Toksabay, Polling by Mumal Rathore, Editing by Jonathan Cable and Miral Fahmy)
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