Economists at Standard Chartered expect the Central Bank of the Republic of Türkiye (CBRT) to raise policy rate by 400 bps at its 20 July meeting.

CBRT to continue monetary tightening in July

We now expect the CBRT to raise its one-week repo rate by 400 bps to 19.0% on 20 July, having previously put our forecast under review. 

Despite some signs of economic slowdown, we expect the central bank to gradually adopt a neutral-to-hawkish monetary policy stance to address renewed Turkish Lira (TRY) weakness, a widening current account deficit and underlying price pressures.

The new central bank leadership has committed to achieving lower trend inflation and a significant improvement in the inflation outlook. Nevertheless, price pressure is likely to remain, with risks tilted to the upside, given elevated inflation expectations, ongoing currency weakness and a wider fiscal deficit.