Looser monetary policy, tighter politics

TURKEY - Report 26 Oct 2025 by Murat Ucer and Atilla Yesilada

The politics section starts not with the acquittal of CHP from charges of a rigged convention, but charges of espionage about removed Istanbul mayor Ekrem Imamoglu, who will have given testimony on Sunday. There is a non-negligible probability that a court will determine strong suspicion of him being guilty as charged, which will pave the way for the Ministry of Interior to appoint a pro-government trustee mayor to govern Istanbul. Such a shock will reverse the good will manifest in Friday’s market action, once again burying Turkey under a thick fog of political risk.

Yet, it may be too conspiratorial to put forth that Imamoglu will be sacked. In the second essay of the politics session, other explanations for CHP acquittal are analyzed. These could range from Erdogan being afraid of economic consequences to MHP having put down its feet to stop the attacks on CHP.

In the “shorts” section, the politics author discusses a new authority granted to DAs to confiscate property and bank deposits without court approval, the announcement by PKK to completely withdraw from Turkey and a new article about Turkey’s rare earth deposits.

On the econ side, the big development was last week’s MPC/CBRT decision, which ended up with the Bank delivering the consensus. As we wrote at the time – and won’t repeat here in detail, at the moment, we give even odds to another 100 bps cut of the policy rate vs a pause at the last meeting of the year.

We touch upon a few other matters inside, including the October consumer confidence data (holding up of sorts) and CBRT reserve developments (not so good).
On the econ side, the big development was last week’s MPC/CBRT decision, which ended up with the Bank delivering the consensus. As we wrote at the time – and won’t repeat here in detail; at the moment, we give even odds to another 100 bps cut of the policy rate vs a pause at the last meeting of the year. We touch upon a few other matters inside, including the October consumer confidence data (holding up of sorts) and CBRT reserve developments (not so good).

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