Istanbuler Börse: Türkische Zentralbank senkt Zinsen auf Kreditkosten – Banktitel legen zu

Turkish banks' stocks surged on Monday following the Turkish Central Bank's surprise decision to cut lending costs. The move fueled hopes for further interest rate reductions throughout the year. The Borsa Istanbul Banks Index rose by up to 4.1%, before falling to a three percent increase. The index tracks all listed banks in Istanbul, weighted by market capitalisation.

Bank stocks climbed, while Turkish government bond yields fell, with two- and ten-year bond returns dropping by 58 and 25 basis points, respectively. The Central Bank announced it would resume weekly repo auctions at its 37% key interest rate. Repo auctions involve buying back securities from commercial banks at a higher price than initially sold, generating a return equivalent to the interest rate.

This switch reverses the move to the higher 40% daily interest rate at the start of March. The decision came amid economic uncertainty following the Iran war. Many economists had expected the Central Bank to resume repo auctions after the next interest decision in September. The move could boost market expectations for credit institutions, said Cemal Demirtas, head of research at Ata Investment in Istanbul.

He believed the inflation pressure might ease, increasing interest in bank stocks. The Central Bank had kept interest rates unchanged at 37% previously. Bloomberg economist Selva Bahar Baziki expects the currency guardians to maintain the level for now. The Central Bank's decision might be linked to policymakers' concerns about economic growth, said the economist.

"If growth remains subdued, there is a risk of an earlier-than-expected rate cut." Turkey's economy has been struggling with persistently high inflation, with the inflation rate at 31.8% in July compared to the same month last year. The Central Bank revised its inflation forecast downward, now expecting a 28% increase by the end of the year, down from the previous 36%.