FAMAGUSTA GAZETTE – Türkiye’s central bank is expected to enforce stricter policies for the remainder of 2025 to counter market instability caused by recent political unrest, experts say.
After curbing inflation from 75% in May 2024 to 39% in February, the central bank cut its key lending rate to 42.5%, citing its commitment to achieving a 24% year-end inflation target.
However, the arrest of opposition leader Ekrem Imamoglu in March has sparked protests, rattling markets and weakening the Turkish lira, which plunged by 14.5% against the dollar before recovering slightly.
The central bank responded with foreign currency interventions worth $26 billion and a 200-basis-point overnight lending rate hike, now at 46%. Despite this, the stock market’s BIST-100 Index saw a sharp 16.5% drop.
Analysts predict further rate hikes, with Goldman Sachs projecting a possible 350-basis-point increase to stabilize the currency and restore confidence.
Economists, however, remain skeptical of the central bank’s 24% inflation target, expecting it to close the year around 30%.
Amid escalating “dollarization” and investor uncertainty, experts suggest halting rate cuts to safeguard economic stability.