The Monetary Policy Committee left all rates as well as all other levers of monetary policy (reserve ratios, ROCs, etc.) untouched, exactly in line with the consensus. The statement was also the plainest we’ve read in a long time....

Prime Minister Erdogan's order for police to forcefully vacate the Gezi Parki prolonged the crisis, turning into an uprising by various segments of the society. The most likely summer scenario, unfortunately, seems to be a continuation of unrest. It is also not feasible to deliver progress on the ...

Two important data prints were released today: GDP grew by a better-than expected 3% in Q1, y/y, while April current account deficit was a wider than expected $8.2 billion. Both prints are problematic in our view, as they yield signs of a struggling economy on two fronts: a not so healthy growth dynamics ...

This weekly has been written in the manner of a strategy piece, focusing on the political, economic and market implications of ongoing Gezi Parki protests, together with potential spillovers from the region. In addition, we took a quick look at the key data releases of the week: April IP and BOP data,

Turkey is going through an extraordinary upheaval of-- so far-- peaceful nature. Organized and galvanized by social media, the “modernist” face of Turkey is on the streets. Even though some steps by AKP reveal a softening of attitude, there is no sign that the party is ready to abandon any of its social ...

In May, consumer prices rose by a lower than expected 0.15%, versus market expectations of around 0.4%, thanks to a somewhat deeper drop in food prices and a softer increase in transportation prices. But because of last year’s low base, the 12-month CPI inflation nevertheless edged up to 6.5% from ...

We had predicted a scorching hot summer in Friday’s Monthly Report, which proved prescient. AKP’s shortsightedness and atrocious police brutality turned a sit-in by 50 tree huggers to rescue the trees in Gezi Park (Taksim Square Promenade) into a nation-wide outburst. The self-imposed coverage ban ...

The politics section provides a preview of the summer, which promises to be the hottest in recent history as we find answers to 4 extremely critical questions. First, we expect the regional outlook to deteriorate into near-chaos after the failure of the Geneva talks. Secondly, Turkey and EU open a ...

The politics section of this Tracker offers brief analyses of the latest regional developments, EU relations and of course, domestic politics as a prelude to our upcoming Monthly, in which we shall also examine the implications of a Fed QE exit for Turkey’s political stability. While we do not expect ...

We are fully aware that the Brief’s title equally applies to both the Moody’s decision -- to upgrade Turkey to investment grade (IG) -- and the timing of this Brief. But it doesn’t hurt to take stock. What Happened? Late Thursday evening Turkish time, quite auspiciously on the very day of Prime Minister ...

The MPC cut all interest rates -- the weekly policy as well as the O/N rates -- today and tweaked the ROC upwards slightly. While we expected the across-the-board cuts, they were deeper (50 bps vs. 25 bps) than expected, and were accompanied by somewhat surprising hikes (about 0.5 pp on certain maturities) ...

Energy is the most vexing problem of the Turkish economy, but also the wellspring of tremendous investment potential and market-driving themes. Despite being a significant energy importer, Turkey aspires to become an important regional energy player, notably in the transit of energy from the Central ...

The Peace Process has created extraordinary expectations for both the markets and the society at large. We need to explain why it is doomed to fail unless an altogether new approach to advance it is adopted. We also provide a road map for May and beyond. Mostly, political risks are set to remain fairly ...

In April, consumer prices rose by a lower than expected 0.4%, versus market expectations of around 0.7%. The gap -- at least as far as our forecast is concerned -- largely stems from softer food and transportation prices. Combined with the base effect from last year’s electricity price hikes, today’s ...

The escalation of war in Syria, reportedly with some use of chemical weapons, and a new bout of sectarian strife in Iraq caused us to raise the DEFCON level on Turkey’s political stability. Some of the scenarios that follow from these latest developments would have global ramifications, too, like a ...

Today, the CBT issued the second Inflation Report of the year and TURKSTAT released the March trade data. We comment on these briefly below. The Inflation Report did not contain any surprises. Most importantly, the yearend (mid-point) inflation forecast of 5.3% did not change, nor has the end-2014 ...

Syria is a lost state, with sectarian violence quickly infesting Iraq. Turkey has shut the door to the main channel of contagion by persuading PKK to pull back, but the regional outlook is deteriorating very fast. At home, the easy part is over, AKP will have to deal with PKK and BDP instead of Ocalan,

PKK Qandil chieftain Mr. Murat Karayilan finally announced the long-awaited pull-out from Turkey, which will start on 8 May. Without denying the historic significance of this declaration for political stability and peace, we must remark that it leaves a lot to be desired. Turkey is now experimenting ...

Friends of Syria were stingy with aid, which helps Assad to defy peace offers. If his recent counter-offensive succeeds, he is in for the long haul. A long war in Syria is almost certain to infect Jordan, and later Lebanon and Iraq. Turkey has largely dodged the bullet, but not the broader fallout ...

The Monetary Policy Committee made another surprise move today by cutting all interest rates by 50 bps, and not touching the required reserve ratios (RRRs). On the side, it also tweaked the Reserve Option Coefficients slightly up by 0.2 pp for tranches higher than 35%. The decision is rather close ...

As Syrian War goes truly regional, Iran and P5+1 agreed to move forward with new rounds of negotiations. Iraqis will head for a historic poll next Saturday, which may determine chances of remaining united. We expect the PKK to officially announce a withdrawal of forces from Turkey this week, but downside ...

Turkey has developed a favorable brand name in recent years and now taken an unprecedented step toward resolving its most debilitating ethnic problem, plus there is no end to global liquidity in sight. Within this broadly favorable context however, we think the Turkish macro story is becoming less attractive ...

Kerry arrived in Turkey to strengthen the budding Israeli-Turkey pact. Can he also aid the Peace Process? PKK is soon to announce whether it shall withdraw unconditionally or demand further confidence-building measures from AKP. Parties finally presented their proposals for the new Constitution. They ...

A number of very favorable developments have taken place in the past few days regarding the Peace Process, i.e. the ongoing talks to end the Turko-Kurdish ethnic conflict. AKP urged the parliament to form an “investigative committee” to report on the Peace Process, as a second message from the PKK leader ...

In March, consumer prices rose by a higher than expected 0.7%, lifting the 12-month rate back up to 7.3%, from 7% a month earlier. Higher food prices are to blame in this outcome, which rose by 2%, m/m, which is markedly above the seasonal averages. The 12-month increase in the favored core indicator ...