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Turkish Central Bank Cuts Interest Rates

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Turkey’s central bank Tuesday cut its benchmark interest rate for the first time in six months, against a fluctuating background of slumping oil prices; optimism that inflation will drop further and mounting political pressure for lower borrowing costs.

The Monetary Policy Committee cut the benchmark one-week repo rate to 7.75% from 8.25%, the central bank said in a statement on its website. Policymakers didn’t make any changes to the interest-rate corridor, which ranges between the overnight borrowing rate of 7.5% and the overnight lending rate of 11.25%.

According to a Wall Street Journal survey, nine out of 12 economists expected the central bank to keep interest rates unchanged, while some bet for a rate cut. Three economists expected the central bank to cut both the one-week repo rate and the overnight lending rate by 25 basis points and the overnight borrowing rate by 25-50 bps.

The central bank said a “tight stance in monetary policy and the macroprudential measures taken are impacting inflation positively, particularly energy and non-food inflation indicators and expectations. Moreover, falling commodity prices led by oil are supporting a fall in inflation.” The central bank said that, given these positive developments, the committee had decided to “make a measured rate cut to one-week repo rate.”

via MarketWatch

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza

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