Eyes on interest rate cut! The Central Bank's hand is strengthened before the meeting

Tuesday, July 01, 2025

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Following the court’s decision, the index at Borsa Istanbul soared yesterday with purchases in bank stocks due to expectations of a strong interest rate cut from the Central Bank. The BIST-100 Index rose by more than 5 percent to exceed 9,900, while the increase in the banking index reached 10 percent. Yapı Kredi, Garanti and Akbank stocks hit their peak yesterday. Turkey ’s 5-year risk premium (CDS) fell below 300 basis points, while the loss in the dollar and euro exceeded 0.5 percent. While foreign purchases of Turkish bonds were striking, there was a decline of nearly 4 percent in the interest rates of 2 and 5-year bonds.

5 POINT DISCOUNT ON THE WAY

Inflation, which fell to its lowest level in 3.5 years in May, is expected to fall to 35.26 percent in June. While the decline in inflation strengthens the Central Bank's hand, experts, who point out that the next Monetary Policy Committee meeting will be in September, believe that the reduction could reach up to 5 points in this month's meeting.

The decrease in tension in the Middle East, the news that US President Trump is willing to solve the F35 and CAATSA problems, and the strengthening of Türkiye's global and regional position will also increase foreign interest. It is noted that if June inflation is below 1.6 percent, dollar demand will decline and foreign inflow will accelerate again.