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This article was originally written for Türkiye Today’s weekly economy newsletter, Turkish Economy in Brief, in its Oct. 20 issue. Please make sure you are subscribed to the newsletter by clicking here.
A political issue that had stood out as a source of uncertainty over Türkiye’s markets was resolved last week. The lawsuits seeking to annul two congresses of the main opposition Republican People’s Party (CHP) were rejected. This development, which had been causing notable volatility particularly in the stock market, was thus removed from the agenda.
With the easing of tension on Friday, the Borsa Istanbul (BIST) 100 index rose by 3.14% to close at 10,941 points. On a weekly basis, the index gained 7.18%, ending a four-week losing streak. During the week, the BIST 100 also surpassed its 100-day moving average of 10,630 and closed slightly above the 50-day moving average support at 10,900.
From now on, the stock market is expected to enter a period where economic developments will have a greater influence. In this regard, last week’s interest rate decision by the Central Bank of the Republic of Türkiye (CBRT) offers important signals.
Following two large rate cuts in previous meetings, the CBRT opted for a 100-basis-point reduction this time. The policy statement noted that the underlying trend of inflation was rising, that the disinflation process had slowed, and that recent price movements—especially in food—posed risks to this process.
It also emphasized that upcoming policy rate decisions would take inflation into account, adding that monetary policy would be tightened if inflation significantly diverged from "intermediate targets."
Based on this, two key dates now stand out for the market in the short term. On Nov. 3, the October consumer inflation (CPI) figure is expected to come in around 2.5%. A higher-than-expected monthly inflation could signal a tighter monetary stance.
Then, on Nov. 7, the CBRT will release its final Inflation Report of the year, which may provide leading signals for monetary policy through any new forecasts. The market is likely to adopt a “wait-and-see” approach during this period.
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