Turkey’s Money Moves: What Investors Are Saying About Future Rate Hikes

Turkish leaders have told investors that they believe their recent actions will keep the economy stable, even as global energy costs rise. In London meetings this week, the central bank governor and finance minister answered questions from foreign investors about possible interest rate increases. The bank has already stopped cutting rates, raised its overnight rate to almost 40 percent, and used large amounts of foreign currency and gold to support the lira. Investors asked whether a further rate hike might happen at the next policy meeting on April 22 if tensions with Iran continue.Responses were mixed: some said the bank could raise rates unless the conflict eases, while others felt no urgent action was needed yet. All agreed that preventing a weaker lira is a priority. The bank’s recent sales and swaps have reduced reserves by about 55 billion dollars and gold holdings by almost 120 tons. Inflation remains high at nearly 31 percent, driven by energy imports, so the bank wants a stable currency to curb import‑price inflation. Foreign investors have pulled about six billion dollars from Turkish debt in the past month, reducing their share of total holdings. Overall, investors feel calm but expect that policymakers will act decisively if the situation worsens.