Turkey’s central bank is likely to keep interest rates on hold at its monetary policy committee (MPC) meeting due on October 25, a Reuters poll showed on October 19.

The Turkish lira (TRY) has enjoyed a rebound in the past two weeks of around 10% versus the dollar. It was trading at around 5.64 against the USD by around 08:00 local time on October 22, rallying on geopolitical factors, such as Ankara’s relationship with Washington, that have improved in Turkey’s favour and substantial economic rebalancing that is under way following the start of the currency crisis this year. In August, Turkey posted its biggest monthly current-account surplus on record. A big reduction in demand for imports indicates a recession may be on the way.

The TRY is still down by around a third against the dollar in the year to date, with Turkey suffering roaring inflation of nearly 25% and a spike in bad debts at banks on exposure to foreign-currency loans.

Twelve of the 15 economists polled by Reuters said they expected the central bank to keep its one-week repo rate unchanged at 24 basis points at the meeting of the rate-setters. The remaining three anticipated hikes of between 75-175 basis points.

“Despite significant disruption to the inflation outlook, financial conditions appear to be improving with political uncertainties decreasing recently and the risk perception towards emerging markets turning positive,” Erkin Isik, chief economist at QNB Finansbank, told the news agency.

“The fall in the exchange rate, if lasting, could especially prevent further disruption in the inflation outlook. Moreover, by taking the sharp deterioration in the leading indicators for growth into consideration, we believe the central bank will hold off this meeting,” he said.

Last month the bank lifted the repo rate by 625 bp, its biggest interest rate increase during President Rectp Tayyip Erdogan’s 15-year rule. It has nearly doubled interest rates this year, tightening by a total of 1,125 bp.