Turkey flees, war finds her

TURKEY - Report 08 Mar 2026 by Murat Ucer and Atilla Yesilada

Like most experts, we had anticipated that Iran, the US and Israel will battle one another way before the Second Iran War began, but failed to see how fast it progressed, its broadening scope to neutral third parties and the ongoing escalation, rather than a consensus on finding common ground for de-escalation. At this juncture, the politics author must work on the assumption that the war will last weeks, if not months, while repairing and bringing on-line the damaged energy facilities will even take longer.

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On the econ side, we share some preliminary thoughts on the impact of the ongoing regional chaos on the Turkish economy, and provide a rundown of last week’s key data releases. The key event of the upcoming week is the MPC meeting on Thursday. While we cannot rule out anything in this place, a rate cut is very unlikely at this point, we think, given the 300 bps de facto hike of the O/N rates, which lasted throughout the week. Should the turmoil continue, we could again be talking hikes, in fact.

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