JPMorgan: Turkey rate hike to 25% in June is 'on the table'

An interest rate hike to 25% from the current 8.5% is on the cards for Turkey's Monetary Policy Committee's upcoming meeting on June 22, "if not earlier," JPMorgan economists said on Monday.

"A policy rate hike to 25%, from the current level of 8.5%, is on the table for 22 June or earlier, along with forward guidance suggesting smaller rate hikes if needed," the Wall Street bank said in an economic research note to clients. "We maintain our year-end policy rate forecast at 30%."

Years of unconventional policies such as cutting interest rates despite hot inflation have weighed on investor views of Turkey, as well as on voter sentiment ahead of President Tayyip Erdogan's reelection late last month.

But there has been guarded optimism for a shift in monetary policy since veteran policy maker Mehmet Simsek returned to head Turkey's Finance Ministry.

During the ceremony where Simsek assumed the position from the previous minister Nureddin Nebati, Simsek said that "that "Turkey now has no option left but to return to rational grounds."

He added that the principles for achieving this objective will be compatibility with global norms and commitment to “transparency, consistency and predictability.”