This week, the economy is at the forefront of the agenda. It is predicted that the policy interest rate will be reduced by 250 basis points to 42.5 percent in this month’s Central Bank interest rate decision.

Last week, there was an upward trend in the domestic market. The BIST 100 index on the Istanbul Stock Exchange closed the week gaining 0.59 percent at 9,658.72 points. Attention is now turned to the interest rate decision and inflation data that the Central Bank of the Republic of Turkey (CBRT) will announce in the new week. According to AA Finance’s survey of 20 economists regarding the Monetary Policy Committee (MPC) meeting, which will be held on Thursday, March 6th, all participating economists expect the policy interest rate to be reduced by 250 basis points to 42.5 percent. The median expectation for the year-end policy rate of economists was 30 percent. In the MPC meeting held in January, the policy rate was reduced by 250 basis points from 47.50 percent to 45 percent.

INFLATION EXPECTATIONS Additionally, the survey of 20 economists by AA Finance on the inflation data for February, which will be announced by the Turkish Statistical Institute (TurkStat) on Monday, March 3rd, revealed that the average expectation for February’s inflation was 2.97 percent. Economists’ inflation expectations for February ranged from 2.30 percent to 3.40 percent. Based on the average February inflation expectation of economists (2.97 percent), it is expected that the annual inflation rate, which was 42.12 percent the previous month, will drop to 40 percent. The Consumer Price Index recorded an increase of 5.03 percent in January.

ECONOMY GREW BY 3 PERCENT The Turkish economy grew by 3.2 percent last year, and by 3 percent in the fourth quarter of 2024. The Gross Domestic Product (GDP) per capita was calculated at 507,615 lira (15,463 dollars) in 2024 with current prices. According to the production method, the GDP at current prices increased by 63.5 percent in 2024 compared to the previous year, reaching 43 trillion 410 billion 514 million lira. Additionally, the dollar/TL closed the week at 36.5000, which is 0.15 percent higher than the previous closing.

BUSY ECONOMIC AGENDA

In the upcoming week, inflation, domestic Producer Price Index (PPI), manufacturing sector Purchasing Managers’ Index (PMI), banking sector net profit, real effective exchange rate on Tuesday, CBRT’s interest rate decision on Thursday, market participants survey on Friday, and treasury cash balance data will be closely monitored in the domestic market.