Turkey’s central bank on Tuesday lowered its benchmark interest rate for the second straight month with a 75 basis points cut to boost economic growth amid mounting political pressure for a looser monetary policy.
The Monetary Policy Committee in Ankara cut the benchmark one-week repo rate to 8.75% from 9.5% after its regular monthly meeting. Policy makers left the overnight borrowing rate at 8% and the overnight lending rate at 12%.
The central bank had been expected to cut rates between 50 basis points and 75 basis points Tuesday, according to 12 economists surveyed by The Wall Street Journal. Some economists had forecast the central bank would cut both its overnight lending rate and one-week repo rate by 50 basis points due to easing inflationary pressure following its peak in May.
In a statement on its website, the central bank cited improving global liquidity conditions for the “measured” cut to its one-week repo rate.
Turkey’s annual inflation rate rose to a two-year high of 9.66% in May from a year earlier, rising from 9.38% in April due to elevated food prices.
Central bank Governor Erdem Basci had said last week the bank may cut benchmark interest rates again, as early as this month, but the rate cut was going to be “measured,” meaning somewhere between 25 and 75 basis points—considered “a joke” by Prime Minister Recep Tayyip Erdogan, who has been pressuring the central bank to lower interest rates more aggressively to spur growth ahead of presidential elections in August.
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