The interest rate decision to be announced by the Central Bank (CBRT) on Thursday stands out as the most important agenda of the week.
Along with the postponed talks in the Turkish Grand National Assembly regarding Sweden’s NATO membership, the Ministry of Foreign Affairs’ budget discussions in the Turkish Grand National Assembly, which will take place today, will also be watched.
According to the CBRT’s survey of market participants, the policy rate at 35 percent is expected to rise to 37.8 percent this week and to 40 percent three months later.
The CBRT, which increased the policy rate by 2,650 basis points in five months with the support of the president after the general elections, gives the message that the tightening will continue and that it is determined to ensure disinflation.
In its current messages, the CBRT points out that it is too early to say that there has been a significant improvement in the inflation outlook, but that inflation has begun to slow down on a monthly basis.
The CPI will peak at around 70-75 percent in May 2024, and then the CBRT will reduce inflation with its holistic effects such as the base effect, the cumulative effects of monetary policy, the continuation of the transition to TL deposits, the cooling of domestic demand, the exchange rate and the reserve increase. “a rapid descent” predicts that it will start.
VALUE LOSS IN TL 34.8 PERCENT
Dollar TL started the day this morning around 28.72, Euro TL around 31.38 TL. It has lost 34.8 percent of its value against the dollar since the beginning of the year. The loss of value in TL since June, when public control over the exchange rate was loosened, has been approximately 28 percent.
The rise in Turkey’s credit default swap premium (CDS), which reached up to 425 basis points at the beginning of the month due to geopolitical concerns, was replaced by a significant decline last week. 5-year CDS finished the week at 356/361 basis points. CDS, which rose to 700 basis points during the general elections, tested below 350 basis points last week.
Black Friday sales this week will be an indicator of the strength of the consumer-focused US economy. On the other hand, transaction volumes will decrease in the markets this week due to the Thanksgiving holiday.
Although there is not much economic data to be announced in the USA this week, the minutes of the last meeting of the US Federal Reserve (Fed), where it kept the policy rate constant for the second time, to be published tomorrow, will provide a clue as to what officials are thinking.
While markets think there is no possibility of an interest rate increase in December or next year, they price the possibility of interest rate cuts starting in March at 30 percent. According to futures transactions, a total interest rate reduction of 100 basis points is expected in 2024.