Crucial Week Ahead for Markets: Gold, Stocks, and Forex Markets Await Key Developments

After gold prices returned from a record high last week and the stock market fell below 9 thousand points, developments that will affect the gold, stock market and foreign exchange markets will be announced this week.

Gold prices fell from their all-time high last week. The BIST 100 index in Borsa Istanbul fell below the critical level of 9 thousand points. This week, all eyes will be on the interest rate decisions of the US Federal Reserve (Fed) and the Central Bank of the Republic of Turkiye (CBRT). On Wednesday evening, the Fed will announce the interest rate decision that foreign markets are eagerly awaiting. The Central Bank will make the interest rate decision at 14:00 on Thursday.

What do the markets expect?

The median value of economists’ expectations regarding the change in the policy rate was to keep the interest rate constant at 45%. According to the survey results, economists’ policy rate expectations were between 45% and 47.50%. The median of economists’ year-end policy rate expectations was 45%.

According to the CBRT Market Participants Survey, the expectation for the policy rate at the end of the current month was 45% and 46.85% for the next 3 months. The policy rate expectation for the next 12 months also increased from 36.62% to 36.96%.

According to the survey, the consumer inflation (CPI) increase expectation in March, which was 3.17% last month, increased to 3.43% in this survey period.

While the current year-end CPI expectation was 42.96% in the previous survey period, it was 44.19% in this survey period. 12-month ahead CPI expectation decreased from 37.78% to 36.70% in the previous survey period.

Additional tightening steps continue

In addition to the Central Bank’s interest rate decision, tightening steps will also be closely monitored.

As part of additional tightening steps, the CBRT increased the interest rate for cash withdrawals from credit cards and overdraft accounts to a level compatible with the consumer loan interest rate, and took new steps to increase the share of Turkish Lira deposits in the banking system.

The bank made a change in the calculation method of the monthly maximum contractual interest rate to be applied to cash advance transactions made from credit cards and overdraft accounts. According to the new method, the calculated monthly maximum contractual interest rate was increased from 4.42% to 5%.

Meanwhile, in successive statements made by international banks last week, predictions were made that there might be a 500 basis point increase in interest rates.

Source: / Prepared by Irem Yildiz

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