As the global economy and markets continue to brave growing risks and uncertainties originating from prospects for the continuation of U.S. protectionist policies, this week in Türkiye brings key data on inflation, along with the central bank's decision on interest rates.
Concerns that U.S. President Donald Trump's protectionist policies could disrupt global trade, as well as rising geopolitical risks, weighed on markets and pricing in recent weeks while also disrupting expectations related to the pace of rate cuts of the central banks, including Federal Reserve (Fed).
Some of Trump's tariffs are expected to come into effect as of March 4, and concerns over more widespread levies appear to be strengthening.
Still, this would likely not daunt policymakers of the European Central Bank (ECB) and the Central Bank of the Republic of Türkiye (CBRT), which are expected to maintain the easing momentum amid stagnant growth in the eurozone and the drop in annual inflation readings in Türkiye.
Both monetary bodies are set to deliver their rate decisions on March 6.
A foggy economic landscape is not expected to distort the ECB as markets await its deposit rate to be lowered by 25 basis points to 2.5% on Thursday.
Similarly, the analysts and economists polled by Anadolu Agency (AA) forecast that the Turkish central bank would cut its key policy rate for the third time in a row this week.
Following a series of hikes in interest rates that started in mid-2023 and lasted through March last year, the CBRT kept its one-week repo rate on hold for months before kicking off long-awaited easing in December.
Accordingly, the CBRT cut rates by 250 basis points in both December and January, setting its policy at 45%.
Despite two straight cuts, CBRT Governor Fatih Karahan, in comments during an inflation briefing last month, said the bank is "not on autopilot," and its decisions are based on data.
Prior to the decision on Thursday, the bank will get fresh insight on inflation as February data is due to be released on Monday by the country's statistical authority.
The annual inflation eased to nearly 42% in January from 75% last May. Some 20 economists polled by AA anticipate the inflation to drop further to 40%, while expectations for monthly readings varied from 2.3% to 3.4%, with a median of 2.97%.
In January, the inflation advanced 5.03% month-over-month.
Ahead of the reading for the country in general, the data from the Istanbul Chamber of Commerce (ITO) showed on Saturday the February consumer price index (CPI) in Türkiye's largest city, Istanbul, rose by 3.19% month-on-month and by 45.35% versus a year earlier.
At the same time, the CBRT took a step early Saturday to support its tight monetary stance by reducing the monthly growth limit for foreign currency loans.
According to a statement, the bank lowered the limit from 1% to 0.5%. It also said that the scope of foreign currency loans exempted from the growth limit has been narrowed.