Introduction to Türkiye’s Markets
The interest rate decision of the Central Bank of the Republic of Türkiye (CBRT) is being closely followed by the markets in Türkiye, standing out as the most important agenda item of the week. At its September meeting, the policy rate had been lowered to 40.50%. Recent developments before the decision on Friday, Oct. 23, have been significant.
Recent Developments
CBRT Governor Fatih Karahan emphasized at an investor meeting in Washington, D.C., that the downward trend in inflation has recently slowed somewhat, that the bank remains determined to ensure price stability, and that it will not abandon its tight monetary policy stance. The CBRT’s October Market Participants Survey showed that the year-end forecast by participants for the Consumer Price Index rose from 29.86% to 31.77%. The survey also estimated that monthly inflation in October could be 2.34%. These developments brought about the predominance of expectations in the market that interest-rate cuts may continue with “more limited steps.”
Impact on the Stock Market
For the stock markets, and especially for the driving force banking sector, this expectation stands out as a “pressure factor.” The Borsa Istanbul BIST 100 index lost 4.77% in value last week, closing at 10,208 points. During the week, the index tested a low of 10,053 and a high of 10,683 points. The reaction coming from levels close to the critical 10,000 support is regarded as “positive.” However, for this reaction to gain significance, it is crucial that 10,000 continues to hold, that the 10,280 intermediate resistances be exceeded, and that the index rise above 10,550, where the 100-day average is approaching.
Market Watch
Another important agenda item of the week is the CHP congress lawsuit to be held on Friday, Oct. 24. The annulment or postponement of the lawsuit is shown by the market as scenarios that would be received positively. As a result, on the economic side, the continuation of the disinflation process may once again come to the fore as a catalyst in the stock exchange during the last quarter of the year.
Year-End Drivers
Inflation data to be announced in the coming months have become more important. On the political side, the elimination of uncertainty also seems likely to support the dissipation of the fog clouds in front of the markets. The focus on interest rate decisions, coupled with political and economic factors, will drive the markets in Türkiye for the remainder of the year.
Conclusion
In conclusion, the interest rate decision by the CBRT, coupled with the CHP congress lawsuit and inflation data, will significantly impact the markets in Türkiye. The continuation of the disinflation process and the elimination of uncertainty will be key drivers for the stock exchange in the last quarter of the year. As the market waits with bated breath for the interest rate decision, one thing is certain – the road ahead will be shaped by these crucial factors.
