Turkey rate hike seen possible after London investor talks

Turkey’s top economic officials signaled in London that another interest-rate increase remains on the table , as they discussed how to contain economic pressures tied to elevated energy prices linked to the Iran war. Turkish Central Bank Governor Fatih Karahan and Finance Minister Mehmet Simsek met with dozens of foreign investors on Wednesday and Thursday, according to people familiar with the discussions.

Officials used the meetings to defend the current policy approach while keeping the option of additional monetary tightening open. Participants left with different readings of the tone, but a broad view among investors was that a rate move at the April 22 policy meeting is a clear possibility, particularly if global energy prices stay high.

Some attendees said they came away thinking a hike was the central bank’s “base case” unless the conflict de-escalates. Others said the officials did not rule out tightening but also did not convey urgency, while stressing a priority of preventing further weakening in the currency.

The discussions took place after a series of steps already taken by the Turkish central bank to support financial stability. The bank has stopped its easing cycle and raised its overnight rate by about 300 basis points to nearly 40%, according to the information shared with investors.

Officials also pointed to heavy use of foreign-exchange and gold reserves to help stabilize the lira. Those interventions have coincided with a drop in total reserves of about $55 billion in a month and a decline in gold reserves of nearly 120 tons in two weeks, according to the figures cited in the briefings.

Inflation remains a central constraint for policymakers. Annual inflation in Turkey was 30.9% in March, underscoring the challenge of balancing price stability, currency pressures, and the impact of external shocks such as energy costs.

Uncertainty remains over the policy path because investor interpretations of the London meetings differed and the next decision is conditional on developments such as energy prices and whether the conflict de-escalates. The next key milestone flagged by investors is the April 22 policy meeting, where a hike is viewed as possible but not guaranteed.