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This article was originally written for Türkiye Today’s weekly economy newsletter, Turkish Economy in Brief, in its Feb. 16 issue. Please make sure you are subscribed to the newsletter by clicking here.
One of the main events for Turkish markets this February was the Central Bank of the Republic of Türkiye (CBRT )'s first Inflation Report presentation of the year, held last week.
The bank raised its year-end 2026 inflation forecast range to 15%–21%, up from 13%–19%.
This decision followed January’s Consumer Price Index (CPI), which came in at 4.84% and exceeded expectations.
During the presentation, Turkish central bank Governor Fatih Karahan highlighted several key points:
Karahan also drew attention with his remarks that “given the current inflation outlook, our targets, demand conditions and expectations, we assess that the threshold for increasing the step size in the short term is relatively high.”
This statement led markets to question whether the Monetary Policy Committee could deliver a smaller rate cut at its March meeting.
Associate Professor Filiz Eryilmaz of Uludag University’s Faculty of Economics commented: “The likelihood of a moderate 100-basis-point rate cut in March has strengthened. February inflation data will clarify the scale of the move.”
Serkan Imisiker, Research Director at Allbatross Portfolio, said, “While a 50-basis-point cut appears more likely at the March meeting, we expect a move within the 50–100 basis point range.”
Meanwhile, ING Bank Chief Economist Muhammet Mercan also projected that “gradual rate cuts will continue,” adding that “rising price pressures and recovering demand conditions led the central bank to act more cautiously last month. A temporary pause at the March meeting should also not be ruled out.”
Despite signaling that tight monetary policy will continue, the central bank’s message was welcomed by markets, reinforcing its commitment to fighting inflation. The clearest market reaction was seen on Borsa Istanbul.
The BIST 100 index surpassed the 14,000 threshold for the first time last week, reaching a new record of 14,320.87 before closing at 14,180.69.
In U.S. dollar terms, the index closed the week at 324.34.
The index has only tested the 344-dollar level twice since February 2015—once in May 2015 and again in May 2024. The current level indicates the index is approaching its highest levels in the past 11 years.
As long as expectations for lower inflation and interest rates in 2026 hold, markets are likely to continue seeing broadly positive pricing.
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