Turkey’s central bank is expected to keep its key policy rate unchanged at its monetary policy meeting Thursday, with economists saying a hike would come as a surprise.

Under newly appointed Gov. Naci Ağbal, the Central Bank of the Republic of Turkey (CBRT) has hiked its benchmark rate by 675 basis points to 17% since November, in an effort to tame inflation.

The central bank kept its policy rate on hold in January in line with market expectations. It stressed additional monetary tightening could be delivered if needed.

The annual inflation rate climbed more than expected to some 15% last month, and Ağbal said a possible interest rate cut will not be on the agenda for a long time this year.

"I expect the CBRT to keep all rates unchanged at the upcoming monetary policy meeting, consistent with its forward guidance at the last meeting," Phoenix Kalen, emerging markets strategy director at Paris-based Societe Generale, said Wednesday.

Kalen noted that she does not expect any movement on policy rates until the third quarter of this year when concrete improvements in realized inflation and progress in inflation expectations create space for policy easing.

"We currently project 100 basis points (bp) of rate cuts in the third quarter of 2021 and an additional 100 bp of cuts in the fourth quarter," she said.

With similar views, Alvaro Ortiz Vidal, head of Big Data Research and chief economist for Turkey at BBVA Research, predicted the bank will put changes on hold for now but they should remain "very vigilant and ready to act."

"The growth momentum is very positive and prompting upward pressure for the output gap, and food prices remain tense," he said.

On the other hand, he added, the exchange rate is appreciating due to "higher credibility" and this balance could put inflationary pressure on imports.

"So far the CBRT could be ‘Wait and See’ but maintaining a clear guidance to fight inflation and ready to act if necessary," he said.

Most analysts in a Reuters poll predicted the first rate cut would come in the third quarter.

Morgan Stanley said it expected a hike to 18% in March or April.

A panel of economists surveyed by the Anadolu Agency (AA) also forecast that rates would remain unchanged.

In a note Monday, ING also said the CBRT would likely hold the policy rate steady, preferring to wait and see the impact of its prior moves.

Analysts at Monex Europe also noted that the bank would likely stay put on its policy decision, as real rates remain positive and the lira recovery continues.

According to Cristian Maggio, head of emerging markets strategy at Canadian-based TD Securities, inflation has been rising faster than expected, but it is unlikely the bank will tighten rates again.

"I think they will hold at 17%. But I think the hold will be accompanied by the stated resolve to hike further if needed," he said.

The bank has said it will maintain its tight monetary stance until its 5% inflation target is achieved by 2023.

The bank expects the year-end inflation rate to hit 9.4% and 7% next year, before stabilizing at around 5% in the medium term.