Agencies
Turkey’s central bank is forecasted to lower its benchmark policy rate this week, a poll showed Monday, after devastating earthquakes struck the country’s southeastern region, killing tens of thousands and razing several buildings to the ground.
Last year, the Central Bank of the Republic of Turkey (CBRT) completed a 500-basis-point easing cycle, which it started to counter a slowdown in the economy, and kept its policy rate steady at 9% in December and January.
The median of a Reuters poll of 17 economists showed the central bank would cut its one-week repo rate by 50 basis points to minimize the economic impact of the earthquakes.
Nine economists expected a cut in the policy rate of up to 200 basis points, the poll showed, while eight institutions expected the central bank to stand pat.
The median forecast in Anadolu Agency (AA) survey expects the bank to lower its key policy rate by 100 basis points at its second Monetary Policy Committee (MPC) meeting of this year.
While 10 economists forecasted the bank would cut rates by 100 basis points, one expected a 150-basis-point decrease, and six projected no change.
Turkey and neighboring Syria were rocked by the devastating Feb. 6 earthquakes, which left millions in need of humanitarian aid with many survivors left homeless.
Business groups and economists have said the earthquake could cost Turkey up to $100 billion to rebuild housing and infrastructure while shaving one to two percentage points off economic growth this year.
In a research note, Barclays said the focus is on the economic and political implications of the earthquake, adding that they maintained their expectation for the central bank to keep its policy rate steady at 9%.
"Although we maintain our base case of no change in rates in H1 2023, the dovish tweaks in the previous statement and earthquake-related expected economic slowdown increase downside risks on our forecast,” Barclays said.
The median of 14 economists who responded to the question about the policy rate at the end of this year showed that tightening is expected from the central bank.
While the forecasts ranged from 6% to 45%, the median stood at 14.5% for the year-end policy rate, according to the poll.