Macro and Politics

* The CBT will release the Residential Property Price Index (RPPI) for December @ 10:00 local time. The Residential Property Price Index (RPPI) increased by 2.7% m/m and 31.4% y/y in November, reaching 204.2, while real house prices recorded a 0.3% annual increase. As a result, the annual real change in RPPI turned positive for the first time since January 2024. This indicates that, despite the weakening observed in housing sales in November, supply constraints and cost-driven price rigidities continue to prevail. Accordingly, given the current level of interest rates and the demand outlook, the recent improvement in real property prices is likely to remain limited and fragile in the near term.

* The CBT will release November short-term external debt stock figures @ 10:00 local time. The short-term external debt stock posted no palpable change in October, materializing at USD165.7bn. 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 1 year or less regarding the original maturity, is rather critical, which is at USD226bn as of October 2025. Of this total, USD25.9bn is attributed to loans taken by resident banks and private sector affiliates from their branches and affiliates abroad. Stripping this amount from the total results in USD200bn. 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 2025 around USD230bn.

* The CBT released its January 2026 Market Participants Survey. Participants revised their 2026 year-end CPI expectation slightly lower to 23.2% from 23.4%, while the 2027 year-end CPI forecast edged up to 17.8% from 17.5%. Longer-term inflation expectations also improved, with the 24-month-ahead CPI declining to 16.9% and the five-year-ahead CPI easing to 11.1%. Survey respondents see monthly CPI inflation at 3.8% in January and 2.05% in February, compared with 3.44% for January in the December survey. We expect January m/m CPI to exceed 4% and our 2026 year-end CPI forecast remains at 23%. Moreover, participants expect the CBT’s Monetary Policy Committee (MPC) to cut the policy rate by 150bp to 36.5% at its upcoming January 22 meeting, followed by another 150bp cut in March, with the 2026 year-end policy rate seen at 28%. Our base case is also a 150bp cut in January, while we acknowledge that a more cautious 100bp cut remains possible. We do not expect a cut of 200bp or more. Our year-end 2026 policy rate forecast stands at 29.5%. Furthermore, participants revised their 2026 year-end USD/TRY expectation slightly higher to 51.17 from 51.08. Our year-end USD/TRY forecast of 51 remains broadly aligned with market expectations. Turning to growth and the balance of paymens, participants expect GDP growth of 3.9% in 2026, while we expect growth to come in at around 4%. Market expectations for the current account deficit stand at USD25.6bn for 2026. We expect the current account to post a USD5.3bn deficit in December, bringing the 2025 full-year deficit to around USD24bn (1.5% of GDP). It’s worth noting that following the November balance of payments data, we revised our 2026 current account deficit forecast up to USD30bn (1.7% of GDP).