Why is Ankara cutting rates while the world is raising them?

It was thought that the biggest threat to the artificial intelligence rally would be a new technology or regulation. This week, markets were reminded of a much older acquaintance: Interest rates. Alphabet grew less than expected in the third quarter. Its shares suffered their sharpest daily decline in over 20 years of stock market history, with a loss exceeding 12%. Amazon and Intel also failed to meet expectations, and Nasdaq futures fell by around 2%. Everyone is asking, "Is it an AI bubble?" I think the question is wrong. The real question is this: In a world where cheap money is over, how many more quarters can a revolution fueled by debt hold its breath?

Will Interest Rates Stifle the Revolution?

Alphabet invested over 51 billion dollars in tangible fixed assets in the last quarter. Data centers, chips, and energy infrastructure are expenditures that show their returns years later. The present value of such an investment depends on the rate at which future cash flows are discounted. When interest rates were near zero, imagination was enough. Now, cash flow is weakening, spending is not slowing down, and the discount rate is rising. For the first time, the market is pricing the spending of tech giants at a realistic cost. The fact that approximately 6.3 billion dollars in assets were affected by the cyberattack on Binance was also an additional blow to an already weak risk appetite.

The Fed's December Exam

The Fed kept the policy rate steady at 3.75-4.00%. But this is not a signal of easing. The Fed's decision, which was the first increase since 2023 in September, was taken with a 10 to 2 vote. Lisa Cook and Beth Hammack were in favor of an additional 25 basis point increase. The reason is inflation. In September, annual PCE was 3.6% and core PCE was 3.1%. The fact that the core indicator increased by 0.3% for the second consecutive month shows that the pressure is not coming only from energy. Customs tariffs and the war in Iran are also pushing energy prices up. Fed Chair Kevin Warsh tied the decision to data that will arrive by December. The Fed does not only have the policy rate at its disposal; it also has a secret assistant: The Bond Market. Long-term interest rates have risen in recent months. Everything from mortgage loans to corporate borrowing has become more expensive. In other words, financial conditions are tightening even without the Fed raising rates. The bill is being paid most heavily by artificial intelligence companies that finance their growth with debt.

Change of Guard in Europe

The ECB kept the interest rate steady at 2.5%. The bank, which raised rates by 25 basis points each in June and September, left the door open for December 17. At this very point, the staff is changing. Christine Lagarde announced that she will leave her post on February 7, 2027. She is mentioned as a strong candidate for the presidency of the World Economic Forum. Isabel Schnabel will move to the IMF in January, and Chief Economist Philip Lane's term ends in May. Klaas Knot and Pablo Hernández de Cos are coming to the fore for the seat. Such a comprehensive management change in the middle of a tightening cycle adds a layer of uncertainty to the market that it is not accustomed to.

Cautious Interest Rate Cut in Ankara

While the world's two largest central banks are sending signals of tightening, the CBRT cut the policy rate by 100 basis points from 37% to 36% on October 22. The MPC summary published yesterday shows the logic behind this decision. According to the summary, recent data confirms the decline in the underlying trend of inflation. In September, monthly inflation was 1.84%, and annual inflation fell by 1.78 points to 29.73%. However, there is a mechanical effect in this decline: Foundation university tuition fee increases were made at once in September last year, but were spread over August and September this year. In other words, the figure may not be as bright as it seems. The Central Bank is also aware of this: It was stated that food and energy could pull monthly inflation up in October, and that service inflation is also expected to rise.

The Cost of the Interest Rate Gap

The most important part of the message is the emphasis that the size and timing of the steps will be determined on a meeting-by-meeting basis, in a cautious manner. It was also clearly stated that if there is a significant and permanent deterioration in the inflation outlook, the stance could tighten again. In other words, the cut is not a roadmap, but a permission: It is valid as long as the data allows.

When placed side by side with the global picture, the equation becomes clear. Outside, interest rates are rising, tech stocks are being sold, and risk appetite is shrinking. Inside, interest rates are being cut. This is both an opportunity and a test. The fact that Borsa Istanbul closed the half-day session flat also summarizes this search for direction. On the technical side, we continue to monitor the 11,250-11,300 resistance. But more decisive than these levels is the course of global appetite.

The Upcoming Calendar

All eyes are now on three dates: US inflation data, the ECB's December 17 meeting, and the Central Bank's last MPC of the year on December 10. All three will answer the same question: Which of these stories will expensive money keep alive? Technology revolutions start with a story and are tested by the cost of capital. As the era of cheap money closes, the question to be asked has changed: Which investment, which economy can continue even with expensive money?