Goldman Sachs Holds TCMB Repo Rate Forecast at 37% – Tight Monetary Policy Signal

Goldman Sachs has kept its year‑end forecast for the Central Bank of the Republic of Turkey’s (TCMB) one‑week repo rate at 37%, underscoring expectations of a prolonged tight monetary stance.

Goldman Sachs' Rate Outlook: Steady 37% Forecast

Economists Clemens Grafe and Başak Edizgil noted in their August 24 report that the TCMB’s earlier‑than‑expected entry into repo auctions introduces downside risks.

Repo Market Expectations and Risks

■Early repo auctions could tighten liquidity conditions.

■The 37% forecast reflects market consensus on a restrictive policy.

■Downside risks may trigger further TL depreciation and inflationary pressure.

Turkey’s Macro‑Balance Strain

Goldman Sachs highlighted that the deterioration in the current‑account balance is becoming structural, potentially accelerating TL depreciation.

TL Depreciation and Dollarization Dynamics

■Faster TL loss could compel the policy rate to stay elevated to curb dollarization.

■Dollarization pressure remains muted, yet TL deposits continue to flow.

■The rebound in TCMB reserves offers short‑term risk mitigation.

Inflationary Pressures and Energy Costs

Elevated energy prices keep inflationary risks alive, reinforcing the case for a tight policy stance.

Market Reaction and Technical Readings

■The BIST 100 is edging toward the red zone of the Ichimoku cloud; Fibonacci retracement levels at 23.6% and 38.2% serve as key support.

■A bearish crossover of the 50‑day EMA below the 200‑day EMA signals a sustained downtrend.

■Short‑term volatility is confirmed by a rise in the VIX Turkey index.

Caner Yılmaz – BIST 100 Technical & Quantitative Analysis Director

The market remains under strong selling pressure. TCMB’s 37% repo outlook signals that rates will stay high in the near term. Technically, entry into the Ichimoku cloud’s red zone, breach of Fibonacci levels, and EMA crossovers elevate the short‑term breakout risk for the BIST 100. Algorithmic trading models should swiftly trim positions that slip below the 50‑day EMA and tighten stop‑losses to 2‑3%. Long‑term investors need to factor FX and inflation risks, shifting exposure toward currency‑linked assets and hedging instruments.