18.01.2025 12:10
In the economy, all eyes are on the interest rate decision of the Central Bank of the Republic of Turkey (CBRT), which will be announced next week. It is anticipated that many macroeconomic indicators, particularly housing and vehicle prices, could change with the Central Bank's new interest rate decision.
In global markets, positive trends emerged last week following the favorable signals from the inflation data released in the US and the banks announcing profits above expectations. Next week, all eyes are on the interest rate decision of the Central Bank of the Republic of Turkey (CBRT) to be announced domestically.
INFLATION CONTINUES TO BE A MAJOR RISK
While the inflation-recession dilemma continues worldwide, the slowdown in core inflation, which the US Federal Reserve (Fed) closely monitors in its monetary policy decisions, has revived expectations that the bank may not be as strict in its interest rate cuts as anticipated.
Uncertainties regarding the potential effects of Donald Trump's policies, who will take office on January 20, on global trade continue to be a determining factor in the markets, while signals from macroeconomic data have somewhat alleviated concerns about a policy mismatch between the Trump administration and the Fed.
TREASURY NOMINEE SIGNALS GROWTH IN THE ECONOMY
As confirmation hearings for Trump's cabinet nominees continue in the Senate, Trump's nomination of American investor and hedge fund manager Scott Bessent for Treasury Secretary has been viewed positively for the country's economy and markets.
Trump stated that Bessent would help lead the US into a new "Golden Age," and he conveyed that he would support policies aimed at increasing the country's competitiveness, eliminating unfair trade imbalances, and prioritizing growth. Speaking at the Senate Finance Committee's confirmation hearing, Bessent emphasized that they would stimulate the US economy by implementing growth-friendly regulatory policies, reducing taxes, and freeing up energy production.
INTEREST RATE CUT TIMELINE MAY BE PULLED FORWARD
As statements from Fed officials are being monitored, Fed Board Member Christopher Waller said that if inflation decreases as expected, the bank could lower interest rates again in the first half of this year. Waller noted that as long as inflation data remains positive or continues in that direction, interest rate cuts could occur earlier than the markets have priced in, stating that if the data is favorable, they could lower rates 3-4 times this year, but if the data does not have an impact, that number could drop to 2 or even 1.
ALL EYES ON THE CBRT'S INTEREST RATE DECISION DOMESTICALLY
Last week, an upward trend emerged domestically. The BIST 100 index in Borsa Istanbul completed the week with a gain of 0.68%, closing at 9,977.94 points, while all eyes are on the interest rate decision to be announced by the CBRT next week. It is anticipated that many macroeconomic indicators, especially housing and vehicle prices, could change with the Central Bank's new interest rate decision.
Economists participating in the AA Finance expectation survey expect the CBRT to cut the policy rate by 250 basis points to 45% in January. The expectation survey conducted by AA Finance regarding the CBRT's Monetary Policy Committee (MPC) meeting scheduled for Thursday, January 23, was concluded with the participation of 17 economists. The median expectation of economists for the policy interest rate by the end of 2025 was 30%.
EXPECTATIONS FOR A SERIES OF INTEREST RATE CUTS
In the MPC meeting held last month, the policy interest rate was reduced by 250 basis points from 50% to 47.50%. Meanwhile, the Dollar/TL closed the week at 35.4620, 0.1% above the previous closing. Next week, housing sales on Tuesday, the CBRT interest rate decision on Thursday, the Consumer Confidence Index, and Moody's credit rating assessment report for Turkey on Friday will be closely monitored.