The Central Bank’s Monetary Policy Committee (PPK) has surprisingly decided to reduce the one-week repo rate by 100 basis points contrary to the market expectations. Thus, the interest rate, which was raised to 19% in February this year and estimated to remain steady at this PPK meeting, has been lowered to 18%. Economists considered the decision risky. Moreover, the bank included the emphasis on core inflation in the statement and the direction ‘to implement the policy rate above the inflation’, which came into our lives with Governor Sahap Kavcioglu has completely disappeared. Experts say the interest rate may further be lowered and it may be reduced by 100 to 150 basis points until the end of the year.
The Central Bank’s interest rate move has also paved the way for TRY instruments to depreciate. The 10-year benchmark interest rate nearly rose by 4% to 18.04%, while BIST 100 Index dropped by 0.43% to 1,404 at yesterday’s close. The country’s 5-year CDS reached its highest level in the last 3.5 months at 410 basis points. USD/TRY hit all-time highs at 8.80 yesterday. This morning USD/TRY breaks a record at 8.85 and BIST 100 Index fell to 1,394.09.
Natural gas and electricity prices are expected to be increased by 15% and 8-15%, respectively, on the average due to the price surge at the international gas and electricity markets and consumption of the natural gas substituting hydroelectricity generation in the country, according to Reuters. The price increase demand from the sector has been delivered to the regulatory institutions.
The seasonally-adjusted confidence increased by 1.5% in the services sector, 4.8% in the retail trade sector, and dropped by 0.7% in the construction sector in September, compared to the previous month, according to the Turkish Statistical Institute (TurkStat).
The real sector confidence index declined by 0.5 points to 113.4 in September, compared to the previous month, according to the Central Bank.
The capacity utilization rate of the manufacturing industry surged by one point to 78.1 in September, compared to the previous month, according to the Central Bank.
The Ministry of Tourism and Culture will release tourism figures for August.