Bank of America analysts expect the Central Bank of the Republic of Türkiye to maintain its policy rate at 37% when the Monetary Policy Council convenes today.
The outlook arrives against a difficult external and domestic backdrop. Foreign exchange reserves have decreased by roughly $21 billion through Monday this week, excluding the valuation impact of gold reserves. At the same time, analysts highlight the potential for inflationary pressure linked to disruptions in the Middle East.
Despite those pressures, Bank of America judges that an interest-rate increase is unlikely at this meeting. Daily data on foreign exchange deposits show only a modest decline, a contrast with the deposit dollarization that followed events in March 2025.
Domestic banking conditions have shifted into a liquidity shortage, a development that has led the central bank to suspend the one-week repo at 37% and instead finance banks at the 40% overnight lending rate. That operational stance provides the central bank with an enhanced ability to manage local market rates, including deposit rates, without adjusting the policy rate itself.
Analysts caution, however, that the Monetary Policy Council could opt for a rate increase to build additional buffers in support of the currency if conditions warrant.
Market indicators show some easing of near-term currency stress. Three-month Turkish lira forward rates have fallen by about 10 percentage points from Monday's intraday peak of 47.3% as pressure on oil prices subsided and the central bank continued to support the USD/TRY rate through reserve deployment under its crawling peg mechanism.
Bank of America analysts emphasize that currency pressures in the coming weeks will be influenced heavily by oil price movements. UBS oil analysts project Brent crude averaging $80 per barrel in March. They note Brent could decline to the mid-$70s per barrel if a rapid de-escalation in the Middle East occurs, but that prices could rise above $100 per barrel later in March if disruption in the Strait of Hormuz persists.
Taken together, the central bank's current toolbox - a combination of standing facilities and active reserve management - appears to be the preferred route for now rather than an immediate policy-rate tightening, according to the Bank of America assessment. Nonetheless, the path forward remains sensitive to oil price developments and reserve dynamics.