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Turkey cbank cuts top rate by 50 basis points again

ISTANBUL, June 21, 2016

Turkey's central bank cut its overnight lending rate by 50 basis points on Tuesday, as expected, marking its fourth straight month of easing and leaving no doubt about new Governor Murat Cetinkaya's drive for looser policy.

The bank lowered the rate, the highest of the multiple interest rates it uses to set policy, to 9 percent. It left its benchmark one-week repo rate on hold at 7.5 percent.

Turkey has eased its lending rate by 175 basis points since March, the last three times under Cetinkaya, who took over as governor in April and has lived up to market expectations he would follow President Tayyip Erdogan's calls for lower rates.

The move also follows signals from the U.S. Federal Reserve of a slower pace of rate increases in future years, which analysts said should give the Turkish bank more room for easing.

All but one of the 17 analysts surveyed by Reuters last week predicted a 50-basis-point cut.

Erdogan, who favours consumption-led growth, has previously equated high interest rates with treason and said they cause inflation, a stance at odds with orthodox economics.

Inflation was 6.58 percent in May, just off a three-year low the previous month. That remains well above the bank's target of 5 percent.

The bank also kept its overnight borrowing rate steady at 7.25 percent. – Reuters




Tags: Central Bank | Turkey | Basis points |

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