BofA: Fund crisis weakens market confidence
Bank of America (BofA) stated that although Türkiye's fund crisis has been contained in terms of systemic risk, its negative impact on economic confidence and activity persists.
In a November 9 report prepared by economists led by Hande Küçük, the bank highlighted that uncertainties surrounding fund resolution and recovery processes continue to undermine market confidence. BofA emphasized that market sentiment has deteriorated significantly compared to a month earlier, while tight financial conditions and slowing credit growth are deepening the slowdown in domestic demand.
BofA expects the Central Bank of the Republic of Türkiye (CBRT) to cut interest rates by 100 basis points at its December meeting. The bank forecasts that the policy rate will decline to 31% and inflation to 25% by the end of 2027. BofA does not anticipate a significant acceleration in the Turkish lira's depreciation unless a major external shock occurs. It expects the CBRT to continue cautious interest rate cuts while closely monitoring inflation, reserve stability, and dollarization risks.
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