Al Mayadeen English

  • Ar
  • Es
  • x
Al Mayadeen English

Slogan

  • News
    • Politics
    • Economy
    • Sports
    • Arts&Culture
    • Health
    • Miscellaneous
    • Technology
    • Environment
  • Articles
    • Opinion
    • Analysis
    • Blog
    • Features
  • Videos
    • NewsFeed
    • Video Features
    • Explainers
    • TV
    • Digital Series
  • Infographs
  • In Pictures
  • • LIVE
News
  • Politics
  • Economy
  • Sports
  • Arts&Culture
  • Health
  • Miscellaneous
  • Technology
  • Environment
Articles
  • Opinion
  • Analysis
  • Blog
  • Features
Videos
  • NewsFeed
  • Video Features
  • Explainers
  • TV
  • Digital Series
Infographs
In Pictures
  • Africa
  • Asia
  • Asia-Pacific
  • Europe
  • Latin America
  • MENA
  • Palestine
  • US & Canada
BREAKING
At least 68 dead in migrant shipwreck off Yemen: IOM
Trump: We want to feed the people in Gaza, we do not want them to starve.
US President Donald Trump: We will impose sanctions on Russia if it does not end the war on Ukraine.
Israeli media: Polls show that 52% oppose Prime Minister Benjamin Netanyahu while only 29% support him.
Israeli media: 32% of Americans still support "Israel's" war on Hamas, while 60% oppose it.
Israeli media: Core US support for "Israel" hits its lowest, while support for Palestine reaches its highest levels.
Al Mayadeen's correspondent reports martyrs, injuries in Israeli bombardment of home in Heker al-Jame area in Deir al-Balah, central Gaza.
Al-Quds Governorate: Today, the spatial division of Al-Aqsa Mosque began in a public and dangerous manner, and we warn of a religious war in the region
The Ministry of Health in Gaza: This brings the total number of victims of famine and malnutrition to 175, including 93 children
The Ministry of Health in Gaza: Gaza's hospitals recorded six deaths due to starvation and malnutrition in the past 24 hours, all of them adults

Wall Street forecasts big rate hikes to Turkish Lira after elections

  • By Al Mayadeen English
  • Source: Agencies
  • 14 Apr 2023 15:47
4 Min Read

Citigroup Inc. analysts now predict Turkey's key rate to close in the quarter at 40%

  • x
  • Wall Street forecasts big rate hikes to Turkish Lira after elections
    A screen displays rates against the Turkish lira at a currency exchange agency near Grand Bazaar in Istanbul on November 24, 2021. (AFP)

Wall Street's major banks virtually uniformly predict that interest rates will rise to levels higher than those seen following the 2018 currency decline after the Turkish elections.

Citigroup Inc. analysts now predict Turkey's key rate to conclude the following quarter at 40%. Bank of America Corp. expects the benchmark to peak at 50% before falling slightly in the final three months of the year.

Turkish President Recep Tayyip Erdogan is facing the biggest challenge to his 20-year rule due to economic issues and the high cost of living, not to mention that victims of the earthquake are reconsidering where their loyalties lie after the disaster struck.

The market appears to agree, with derivatives used to speculate on future borrowing costs also indicating forecasts for considerably higher rates following the referendum.

Bloomberg experts' consensus on third-quarter projections has risen from 10% in February to 25.5%, compared to the current 8.5%.

According to Citi economists Ilker Domac and Gultekin Isiklar,  “A stronger adjustment bringing the policy rate to about 40% or even higher may be a more prudent course of action."

The large dose of monetary tightening projected by global banks indicates that economics will triumph over politics, regardless of the outcome of President Recep Tayyip Erdogan's two-decade tenure.

If elected, an opposition coalition has vowed a return to traditional monetary policy and an "autonomous" central bank.

Erdogan currently has the authority to directly select and remove the central bank governor and members of the monetary policy committee.

Related News

Turkey, Egypt discuss Gaza aid, ceasefire talks: Reports

Report questions Turkey’s role in future European defense plans

If Erdogan's unorthodox methods are called into question, the journey back to the mainstream will almost certainly be longer and more expensive than if the central bank had intervened sooner in the face of one of the world's worst inflation crises last year, according to Bloomberg.

Unsustainable policy

Turkey has fallen short of correcting its large current-account deficit or suffocating pricing pressures by relying on ad hoc measures while keeping official borrowing prices substantially below inflation.

Viktor Szabo, an investment director at abrdn in London believes the current policy path is "unsustainable."

“And while the opposition has a sensible macro program, it will be a painful adjustment as it would require crashing the economy first to bring down inflation,” Szabo added.

Sections of the economy are already operating substantially independently of government policies. Deposit rates have reached their highest level in four years, with the difference between them and the central bank's benchmark being the biggest in a decade.

Erdogan has committed to his "New Economic Model," a program that favors exports and low-interest loans, eschewing traditional policies in favor of ultra-low interest rates.

Despite inflation exceeding 85% in 2022, the central bank has not hiked its main rate in two years. Instead, it has cut the benchmark in half since mid-2021, bringing it down to single digits.

Read more: Faith in Erdogan and his economic policies dwindles

Although an opposition victory would signify a more significant rupture with Erdogan's legacy, there are indicators that policy gears might move even if the incumbent AK Party retained power.

Erdogan said last week that his market-friendly former finance minister, Mehmet Simsek, is overseeing an economic policy revamp without taking on a formal position.

BofA economists including Zumrut Imamoglu believe that “Regardless of the outcome, we see a weaker lira and tightening economic conditions to address imbalances."

  • Turkey
  • Turkish lira
  • Turkish President Recep Tayyip Erdogan
  • Turkish elections
  • Wall Street

Most Read

A rescued crew member from the ETERNITY C vessel in a video released by the Yemeni Armed Forces on July 28, 2025 (Yemeni Military Media)

Yemen Navy reveals fate of targeted Eternity C ship crew

  • Politics
  • 28 Jul 2025
An Israeli tank explodes following an ambush by al-Qassam Brigades in Gaza, Occupied Palestine, undated (Al-Qassam Military Media)

Al-Qassam strikes Israeli vehicles in Gaza, inflicts casualties

  • Politics
  • 30 Jul 2025
UAE lodges complaint against Israeli ambassador over 'misbehavior'

UAE lodges complaint against Israeli ambassador over 'misbehavior'

  • Politics
  • 1 Aug 2025
Protesters chant anti-Israeli slogans as they carry a banner that reads:" Freedom for Palestine, Alliance stop the war," during a demonstration in support of Palestinians in Gaza, outside the Israeli embassy, in Athens, Monday, June 9, 2025 (AP)

Athens mayor slams Israeli ambassador over Gaza war, graffiti claim

  • Politics
  • 3 Aug 2025

Coverage

All
The Ummah's Martyrs

Read Next

All
A member of the al-Qassam Brigades, the armed wing of Hamas, takes part in a parade as he celebrates a ceasefire agreement between Hamas and the Israeli regime in Deir al-Balah, Gaza Strip, Sunday, January 19, 2025 (AP)
Politics

Al-Qassam: We’ll allow aid to Israeli captives if Gaza siege ends

Freed Lebanese freedom fighter Georges Abdallah during an interview on Al Mayadeen, which aired on Sunday, August 3, 2025 (Al Mayadeen screengrab)
Politics

Exclusive: Resistance key to building state, Georges Abdallah says

United Nations Secretary General Antonio Guterres gives a statement about the situation in Gaza at UN headquarters, Friday, June 27, 2025 (AP)
Politics

UN warns Gaza faces water crisis, looming famine under Israeli siege

Israeli soldiers drive their armored personnel carrier along the Gaza Strip, in southern occupied Palestine, Wednesday, July 30, 2025 (AP)
Politics

Ex-Israeli general says Gaza starvation campaign isolated 'Israel'

Al Mayadeen English

Al Mayadeen is an Arab Independent Media Satellite Channel.

All Rights Reserved

  • x
  • Privacy Policy
  • About Us
  • Contact Us
  • Authors
Android
iOS