The energy shock ends the rate cut dream as Turkey faces the dual pressures of inflation and war.

Golden Ten Data reported on March 12 that Turkey's rate-cutting cycle is likely to come to an end this Thursday. The surge in global energy prices driven by war is threatening to reignite the country's inflation woes. Among the 17 analysts surveyed, all but one expect the Turkish central bank to keep the one-week repo rate unchanged at 37% after five consecutive rate cuts since July. Turkey relies heavily on imports for most of its oil and natural gas, meaning global energy prices directly affect domestic costs. Analysts pointed out that as the Iran war causes energy prices to soar, policymakers should pause lowering borrowing costs—especially since the country's current annual inflation rate of 31% remains among the highest in the world. Meanwhile, the Turkish central bank has tightened monetary conditions. It has shifted the funding source provided to commercial banks from the 37% policy rate to the more expensive 40% overnight lending rate, effectively raising rates in disguise. In addition, the central bank has issued liquidity bills and held deposit purchase auctions.