Turkish Central Bank Cuts Rates as Expected

Turkey’s central bank cut all of its three main interest rates, citing a slowdown in inflation.
The central bank reduced its benchmark one-week repo rate and the overnight borrowing rate by 25 basis points to 7.50 percent and 7.25 percent respectively.

It also trimmed the overnight lending rate by 50 basis points to 10.75 percent, according to a statement on its website. Analysts expected the bank to cut all three rates, according to median estimates in three separate Bloomberg surveys.

The government has persistently called for Governor Erdem Basci to lower borrowing costs to boost economic growth since the central bank more than doubled the main rate in an emergency meeting in January last year. The central bank has so far only partially unwound that increase and Prime Minister Ahmet Davutoglu called the rate cut on Tuesday insufficient.

“A more persistent reduction in inflation necessitates a cautious approach in monetary policy,” the bank’s Monetary Policy Committee said in the statement. “Taking into account the elevated volatility in food and energy prices, the committee decided to cut the interest rates at a measured scale.”

via Bloomberg

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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