Daily Bulletin

Good morning. Let's begin this morning with the interest rate decision from the Central Bank of the Republic of Turkey (CBRT) Monetary Policy Committee (MPC). In line with our expectations, the MPC raised the policy rate from 42.5% to 46.0%, and increased the overnight lending rate (the upper bound of the interest rate corridor) to 49%. The Committee also announced that it will resume weekly repo auctions, signaling its intention to maintain funding around the 46% level. This implies that despite a 350 basis point increase in the policy rate, there will be no significant change on the funding side. However, the upper bound of the interest rate corridor at 49% provides room for intervention if needed to support the Turkish lira (TRY) and TRY-denominated assets. Therefore, we interpret the decision as supportive for TRY assets. As of March 19, our base case expectation was for the policy rate to be at 40% by the end of April. However, we are now observing a level of 46%. Although we anticipate rate cuts to resume following the June 19 MPC meeting, we believe that target levels for the BIST 100 index pointing above 14,000 may be subject to downward revisions in the short term. Nevertheless, we do not expect the index-based potential—currently calculated above 50%—to fall below 45% even with revised figures. For this reason, we foresee a continued “accumulation” phase in BIST. Current market dynamics and capital inflows also support our outlook. In the short term, resistance levels are observed at 9,500 and 9,580, while support levels can be monitored at 9,250 and 9,000/9,100. Today's agenda is relatively quiet, with most international markets closed for holiday. Turkey’s 5-year CDS premiums start the day at 329 basis points.