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Türkiye’s central bank is expected to deliver a 300 basis point rate increase at its April meeting, lifting the policy rate to 40%, as rising oil prices tied to the Iran war reshape inflation expectations, according to a report by Chinese lender ICBC's local investment arm.
According to the report, energy-driven cost pressures are beginning to feed more visibly into consumer prices, and estimates that a 10% increase in crude oil prices could add around 100 basis points to inflation, strengthening the case for a more forceful policy response.
In March, the central bank had already tightened liquidity conditions by funding banks at 40% instead of the official 37% policy rate, a step ICBC described as a de facto rate increase.
ICBC also revised market expectations, suggesting the year-end policy rate could rise toward 35%, up from a prior range of 30–31%, as inflation forecasts adjust upward.
Türkiye’s annual inflation rose to 31.5% in February and is expected to approach 34% in March, with monthly increases seen between 2.2% and 2.5%.
Global oil prices climbed again after U.S. President Donald Trump warned of a potential strike on Iran within weeks, pushing Brent crude close to $110 per barrel at intraday highs.
Governor Fatih Karahan said a permanent 10% rise in oil prices adds about 1.1 percentage points to annual consumer inflation, implying a roughly 5.5-point impact as Brent crude remains about 50% above its pre-war level.
"So far, we have promptly introduced measures to reduce inflationary effects. Currently, uncertainties remain as to the course of the war," he said, adding that the bank "will ensure the tightness required to contain the inflationary effects of the developments through expectations and pricing behavior."
At its March Monetary Policy Committee (MPC) meeting, the bank paused its easing cycle and held the policy rate at 37%, with the next meeting set for April 22.
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