CBRT Rate Cut Expectations Strengthen Following September Inflation

With consumer prices rising in September, annual inflation dropped below 30 percent after a long hiatus. This development strengthened expectations in markets and economic management that the Central Bank of the Republic of Turkey could implement an interest rate cut at its meeting on October 22.

Inflation Falls Below 30 Percent

According to TURKSTAT data, consumer prices increased by 1.84 percent monthly in September. Annual inflation came in below 30 percent for the first time since November 2021.

Economists' Rate Cut Expectations

The September data remaining below market expectations is significant regarding the CBRT's interest rate decision on October 22. According to economist reports, the vast majority of institutions expect a 100 basis point rate cut at this meeting.

Legislative Preparation for the Fund Crisis

New legislation regarding the fund crisis is being worked on in Ankara's political circles. It is stated that the draft study prepared at the Presidential Complex has reached its final stage and is expected to be presented to President Erdoğan.

Third Quarter Divergence in Investment Instruments

A clear divergence occurred among investment instruments in the third quarter. While Bitcoin emerged as the winner of the period by gaining approximately 43 percent in value, Borsa İstanbul recorded a drop of over 15 percent.

Decline in Central Bank Reserves

According to calculations made by economists from balance sheet data, Central Bank reserves experienced a decline extending into their sixth week. It is stated that a loss of approximately 21.2 billion dollars occurred during this period.

Real Sector and Treasury Costs

High interest rates and difficulties in accessing credit continue to challenge the real sector. On the other hand, it is noted that continuously borrowing at high costs increases the risk of financial fatigue for the Treasury.