Will Türkiye’s Central Bank Raise Interest Rates in April? Citi and Goldman Sachs Offer Forecasts

Türkiye’s next interest rate decision is drawing growing attention from investors after the Central Bank left its policy rate unchanged in March. While the benchmark rate remains at 37%, global financial institutions including Citi and Goldman Sachs warn that rising geopolitical risks, higher energy prices, and pressure on foreign exchange reserves could force the Central Bank of the Republic of Türkiye (CBRT) to tighten monetary policy again. Markets are now focused on the April 22 Monetary Policy Committee meeting, where analysts say the bank could either hold rates steady or implement a rate hike if economic risks intensify.

Central Bank Holds Rate at 37%, Attention Turns to April

The Central Bank of the Republic of Türkiye (CBRT) kept its policy rate unchanged at 37% during its March Monetary Policy Committee (MPC) meeting.

However, the next decision scheduled for April 22 has already become a key focus for markets.

According to the CBRT’s latest expectations survey, economists generally anticipate that the policy rate will remain around 37% in the near term. Despite this baseline view, several international institutions warn that tightening could return if macroeconomic risks increase.

Citi: CBRT Shifts Toward a More Cautious Policy Tone

In its latest report on Türkiye’s monetary policy, Citigroup highlighted a noticeable shift in the tone of the central bank’s latest policy statement.

The report, prepared by economists İlker Domaç and Gültekin Işıklar, noted that the CBRT appears to have moved away from a previously more accommodative stance toward a more cautious policy path.

According to Citi:

• The latest MPC statement adopted a significantly more cautious tone

• References suggesting a bias toward easing were removed

• The central bank appears to be signaling a more prudent policy trajectory

Based on this shift, Citi expects the CBRT to skip any rate changes in April, maintaining the current policy rate.

However, the bank also warned that the possibility of a direct rate hike cannot be ruled out under certain conditions.

CBRT Interest Rate Decision: Top Analysts Weigh In on Turkey’s Economic Path

Key Risks That Could Trigger a Rate Hike

Citi economists pointed to two main risks that could push the CBRT toward tighter monetary policy:

1. Sustained pressure on central bank foreign exchange reserves

2. A renewed shift toward dollarization among domestic depositors

If these dynamics intensify, the central bank may need to respond with stronger tightening measures to stabilize financial markets.

Goldman Sachs Warns of Possible Rate Increase

Analysts at Goldman Sachs Group Inc. also flagged the possibility of higher interest rates in Türkiye.

In a research note dated March 12, economists including Clemens Grafe warned that the ongoing war involving Iran and persistently high energy prices could increase inflationary pressures in Türkiye.

They said these developments could either:

• accelerate inflation pass-through into domestic prices, or

• increase pressure on the central bank’s foreign exchange reserves.

As a result, Goldman Sachs sees the possibility of a 300 basis point interest rate increase at the April 22 MPC meeting.

The report also suggested that the policy rate could potentially move toward the overnight lending rate level of 40% or higher if economic pressures intensify.

Rising Oil Prices Are Shaping Expectations

Recent increases in global oil prices are also influencing market expectations for Türkiye’s monetary policy.

According to analysis by Gedik Investment, market expectations for the policy rate at the upcoming MPC meeting have risen from 35% last month to 36.4%.

Despite this shift, survey data still suggests that markets have not entirely abandoned the possibility of modest rate cuts later in the year.

Expectations for the year-end policy rate have also been revised upward:

• The forecast rose from 29% to 30.6%,

• representing a revision of roughly 160 basis points.

If higher energy prices push inflation forecasts upward by about two percentage points, analysts say the expected year-end policy rate could rise further to the 32–33% range.

ANALYSIS: Current Account Deficit Widens and Reserves Dip, but Financing Remains Abundant

Economists See Multiple Policy Scenarios

Economist Haluk Bürümcekçi, an analyst at AA Finans, said the direction of monetary policy will depend largely on inflation dynamics and global commodity prices.

According to Bürümcekçi, if several risk factors persist, the central bank could consider additional tightening measures.

These include:

• Continued weakness in the disinflation trend

• Persistent strength in global commodity prices

• Ongoing tightening measures already initiated by the CBRT

Under such conditions, the April meeting could result in either unchanged interest rates or additional tightening, such as a rate increase or widening of the interest rate corridor.

Geopolitical Risks Influencing Policy Outlook

Kutay Gözgör, Research Director at Kuveyt Türk Investment, said the central bank’s latest policy communication reflects rising geopolitical uncertainties.

According to Gözgör, the shift in tone in the MPC statement was influenced by several external risks:

• increasing geopolitical tensions

• weakening global risk appetite

• rising energy prices

Nevertheless, he added that the central bank has not completely closed the door to future rate cuts.

Future policy decisions will depend on whether inflation outcomes and expectations remain consistent with the disinflation path targeted by the CBRT.

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