Expectations for Turkish inflation through the end of this year have ticked higher, a closely watched survey showed Monday, as the country’s central bank is seen holding its benchmark policy rate unchanged this week.

Propelled by rising energy and commodity prices, Turkey’s annual inflation runs at a 20-year high of nearly 70% as of April, according to official data.

Consumer prices have been increasing despite tax cuts on basic goods and government subsidies for utility bills to ease the burden on household budgets.

Year-end consumer price inflation is seen at nearly 58%, a central bank survey of market participants showed Monday, up from a forecast of 46.44% a month earlier.

Participants see the inflation rate at 33.28% a year from now, up from the 28.41% estimate in the previous survey, and at 17.68% in two years, from the previous forecast of 19.54%.

Treasury and Finance Minister Nureddin Nebati last week said expectations were one of the biggest factors to blame for the increase in inflation.

Calling for an all-out battle against soaring prices, Nebati stressed that the country would ensure that the rigidity in expectations is "broken."

Longer-term inflation expectations are monitored closely by central banks as evidence of whether their policies are keeping inflation psychology at bay.

If expectations continue to rise, it would indicate a loss of confidence in the monetary authorities’ ability to control inflation – and make inflation itself harder to beat without painfully high and fast interest rate increases.

The Central Bank of the Republic of Turkey (CBRT) is expected to hold its policy rate unchanged at 14% on Thursday, a Reuters poll showed on Friday.

Most economists polled expect the key interest rate to remain steady through year-end.

Inflation has surged since last autumn as the Turkish lira weakened after the central bank in September embarked on a 500-basis point-easing cycle.

The CBRT paused an easing cycle in January and kept rates steady at the last four meetings.

All 15 economists in the Reuters poll expect the central bank to maintain its benchmark rate – the one-week repo rate, in the policy-setting meeting this week.

Only two of eight economists expect the bank to reverse policy later this year and hike rates due to price pressures and lira weakness, while the majority expect no change in 2022.

The survey on Monday showed that the lira is also expected to decline further against the U.S. dollar through the end of the year.

Participants see the year-end dollar/lira exchange rate at 17.57, up from a forecast of 16.85 in April.

The lira lost some 18% against the greenback this year.

The government says inflation will fall under its new economic program, which prioritizes low interest rates to boost production and exports with the goal of achieving a current account surplus.

The central bank late last month revised up its inflation forecasts for this year and the next, mainly because of the rise in commodity prices and supply issues.

It had forecast that annual inflation will peak at around 70% by June before declining to near 43% by year-end and falling to single digits by end-2024.