Most recent posts from Türkiye

The CBRT cut the policy rate by 100bp to 36% and accordingly lowered the asymmetric interest corridor to 34.5-39%, in line with the market consensus. The CBRT also signals that the easing cycle may not proceed smoothly, with potential pauses along the way.

Economic activity remains subdued as our monthly GDP indicator nowcasts an annual growth of 2.7% in 3Q26, implying a quarterly growth of around 0.5%. Considering the current weak momentum, ongoing geopolitical risks and the recent shock through funds, we see increasing downside risks to our 2026 GDP growth forecast of 3%.

Credit growth continues to lose momentum as macroprudential restrictions remain the key sector driver. We continue to expect 2026 ROE at around 25%, with risks tilted to the downside. Further decline in TL funding costs should support margins, although slower loan growth and rising costs may constrain the ROE recovery.

Tighter global financial conditions and persistent inflation pressures require a prudent policy mix. We expect monetary policy to stay restrictive, with historically high real rates and continued macroprudential measures, while fiscal and credit support is likely to be selective.

The CBRT again kept the policy rate and the interest corridor unchanged at 37% and 35.5-40%, respectively, in line with the market consensus. Following the CBRT’s earlier and faster-than-expected easing as of August 23rd, today’s decision appears to signal caution amid the renewed rise in energy prices.

Consumer price inflation came in at 1.84 % m/m in Aug26, slightly below our expectation and the consensus (1.95% m/m), lowering annual inflation to 31.5%. We maintain our year-end inflation forecast at 30% keeping in mind the volatility in energy prices, uncertainties in supply chains, and unanchored inflation expectations.

In spite of the conflict, 2Q26 growth could surprise to the upside relative to our previous forecast as our monthly GDP indicator nowcasts 3.0% y/y growth for 2Q26, indicating a quarterly growth of around 1.0–1.5%. We keep our 2026 GDP growth forecast at 3.0%, with geopolitical tension as the key downside risk.