The lira continues to be subject to a prolonged controlled devaluation by the authorities. “Rising political risks are taking shape at an inopportune time for the Turkish lira,” JPMorgan said in a research report.
The authorities have taken costly steps to keep the lira stable amid a war with Iran. Turkey’s central bank has suspended its monetary easing cycle and has already raised the overnight lending rate by 300 basis points to around 40% in April, as well as sold and exchanged foreign exchange and gold reserves worth tens of billions of dollars to support the national currency.
Bank experts now predict that Turkey’s central bank may raise the one-week repo rate to 40% from the current 37% as early as the Monetary Policy Committee meeting scheduled for June 11, or even earlier, Reuters reported.
According to the latest official data released, Turkey’s annual consumer inflation stood at 32.37% in April, jumping from 30.87% in the previous month. It was the highest since October 2025 as prices rose across most major sub-indices, especially food and non-alcoholic beverages, utilities and transportation.
