Goldman Sachs expects the Central Bank of Turkey (TCMB) to implement a 350 basis point interest rate hike.

Goldman Sachs economists Clemens Grafe and Başak Edizgil predict that the Central Bank of the Republic of Turkey (CBRT) may raise the policy interest rate by 350 basis points during the Monetary Policy Committee (MPC) meeting on April 17 or before that date. This move is aimed at emphasizing the bank’s commitment to its disinflation program and its implementation capacity. The report also notes the reasons behind the CBRT's decision to raise the overnight lending rate by 200 basis points on March 20, highlighting expectations that market volatility could be quickly controlled.

The Goldman Sachs assessment emphasizes that recent selling pressure in the markets largely stems from foreign investors, although it is also linked to the behavior of domestic investors. The bank's economists believe that Turkey's high level of reserve assets makes this impact manageable. However, a significant risk arises from domestic deposits potentially shifting back to foreign currency, indicating a renewed “dollarization” process, which may undermine monetary policy effectiveness and price stability targets.