Traders and some economists indicate that Turkey's central bank is expected to pause interest rate reductions in March, as the conflict in Iran has triggered a surge in energy prices, jeopardizing the country's inflation control efforts. Interest rate-linked derivatives, particularly one-month and three-month overnight index swaps, recorded their largest single-day increase in a year on Monday. This suggests that traders have priced in expectations for interest rates to remain elevated for a longer period ahead of the central bank's policy meeting on March 12. Meanwhile, economists from JPMorgan and Deutsche Bank have also revised their forecasts, now anticipating that the Turkish central bank will keep interest rates unchanged this month, following five consecutive policy meetings of rate cuts.
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