Weak Lira Puts Rate Hike Back on Turkey’s Radar Days Before Vote
- Most economists still predict rate hold ahead of local ballot
- Lira is worst performing emerging-market currency this month
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An interest-rate hike is back on the table in Turkey just two months after the central bank declared its tightening cycle over.
Revived demand for hard currency ahead of local elections on March 31 is speeding up a depreciation in the lira and contributing to a decline in foreign reserves, just as the outlook for inflation turns for the worse. What’s not clear is if Fatih Karahan, who telegraphed a hawkish message at his first meeting as governor a month ago, sees a compelling case for a rate hike already.