Türkiye | A positive CBRT surprise - we almost forgot

Summary

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%).

Key points

• Key points:
• The CBRT seems relatively cautious and highlights the likelihood of a stronger than initially expected monthly consumer inflation for January, led by food prices. Despite the expectation of a limited deterioration in the underlying trend, we understand the CBRT aims to avoid any further deterioration in the trend stemming from expectations after a firm start of the year.
• The CBRT also acknowledges decelerating disinflationary impact from demand conditions as of 4Q25, which we have been highlighting for quite some time and discussing demand might have not cooled down adequately to help converge to the targeted inflation levels.
• We continue to construct our baseline with a disinflation trend but evaluate the balance of risks is shifting towards a stickier inflation trend alongside upside risks on the economic activity.
• Therefore, we welcome today’s prudent decision as showing the market that there is no pre-determined easing cycle, compared to the latest market participants survey of 150bps cuts in the first three meetings of the year.
• We maintain our view of gradual rate cuts from the CBRT by 100bps till 2H26, which could decelerate further and finish the year at 32% policy rate.

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