Publications

The CBRT surprised positively and reduced the policy rate by 100bps to 37.0%, below our expectation and consensus of 150bps, with also a similar size of cuts in the corridor (35.5%-40.0%).

Domestic demand driven GDP growth could come in between 3.5–4% y/y in 2025. We maintain our 4% growth forecast for 2026, but see upside risks from carry-over effects, ongoing monetary easing cycle, signals of a neutral fiscal stance, and resilient global activity.

Consumer prices rose by 0.9% in Dec, leading its annual inflation to fall to 30.9% by end 2025. Lower than expected Dec figure and supportive early year tax adjustments create room for a similar 150bps rate cut in January; however, the persistent stickiness in inflation trend and expectations requires to remain cautious.

Banks’ operating environment started to improve after September with extending margins. On the other hand, the disinflation strategy of the monetary policy continues to be supported by macro-prudential measures, which we expect to be maintained to a large extent in 2026.

Headline inflation realized as 0.87% m/m, lower than both market and our expectations(1.25%), led the annual rate down to 31.1%, yet the underlying trend remains strong. We now expect 31.5% inflation for the year end and CBRT to remain cautious with a similar 100 bps cut next week.

Türkiye’s economy grew by 3.7% y/y in the first three quarters of the year. Growth in 2025 is highly likely to align with our 3.7% forecast, while for 2026 we maintain our 4% growth forecast, considering the expected easing cycle, neutral fiscal stance , carry over impact and resilience expectation in the global economy.

The total FX position of the economy continued to improve in 3Q25 (with the latest data of Aug25) due to an improvement in public sector’s FX position, led by the CBRT. The composition of external debt continues to shift between the public sector and the real sector.