Macro and politics

* The CBRT will release the results of the January Market Participants’ Expectations Survey today @ 10:00 local time. According to the December survey results, the 12-month ahead (2025YE) annual CPI expectation was revised down merely to 27.1%, from 27.2%, while the 24-month ahead annual CPI expectation rose slightly to 18.5%, up from 18.2%. Today’s survey results will be closely monitored for any significant changes in the 2025 year-end forecasts. Additionally, monthly inflation expectations for January will also be carefully scrutinized. Alongside inflation projections, participants’ expectations for the upcoming Monetary Policy Committee (MPC) meeting, scheduled for Thursday, January 23, will be of particular interest. Ahead of the upcoming January inflation data – expected to be around 4% on a monthly basis and to be published at the beginning of February – we assess that the MPC is likely to continue implementing rate cuts during the January meeting. We believe that the absence of any meetings until March will provide the Bank with ample time to monitor inflationary trends. Therefore, we expect the MPC to cut the policy rate by 250bps to 45% in the January meeting, in line with market consensus, according to the survey conducted by Foreks. Our year-end 2025 policy rate forecast stands at 30%, while our inflation forecast is 28%.

* The CBT will release November short-term external debt stock figures @ 10:00 local time. Short-term external debt stock in October materialized at USD180.1bn, up by 2.3% compared to 2023YE. In terms of short-term debt statistics, we believe that “debt stock on a remaining maturity basis,” calculated based on the external debt maturing within one year or less regarding the original maturity, is rather critical, which is at USD236.1bn as of September 2024. Out of this figure, USD22.9bn is debt to the resident banks and private sectors to the banks’ branches and affiliates abroad. Stripping this amount from the total results in USD213.2bn. We also add 12-month forward-looking CAD expectations on this amount so as to reach Turkey’s annual external financing need (EFN).  Accordingly, we calculate EFN as of October 2024 around USD230bn.

* The CBRT will release the Residential Property Price Index for December @ 10:00 local time. The Residential Property Price Index (RPPI) registered a monthly rise of 2.8% and an annual increase of 29.48% in November, reaching a level of 155.4. Yet, in real terms, RPPI dropped further by 12% y/y. The real depreciation in RPPI on an annual basis has persisted since February.

* During the week of January 3–10, the equity market witnessed a foreign outflow of USD211.8mn, while the bond market recorded a net foreign inflow of USD460.5mn (excluding repo transactions). Furthermore, the foreigners’ share in the total bond stock remained unchanged at 7.9% during this period. On an annual basis, the equity market saw a cumulative foreign outflow of USD2.7bn, whereas the bond market (excluding repo transactions) experienced a cumulative foreign inflow of USD16.4bn. The residents’ FX deposits receded by USD1.1bn (gold accounts excluded, EUR/USD parity adjusted) in the period of January 3 – 10, while their total FX deposits (including gold, price adjusted) eased by USD1.2bn in the week of January 3 – 10. The CBRT’s gross FX reserves increased by USD2.52bn to USD160.56bn, while net international reserves rose by USD2.34bn to USD69.95bn. Net reserves excluding swaps, moreover, climbed by USD8.3bn to USD54.9bn.