Last Wednesday, as expected Turkey’s central bank lowered its key interest rate by 50 basis points to 10.75%, its sixth consecutive rate cut and the smallest so far in an aggressive easing cycle designed to boost economic growth.
The bank cut its benchmark one-week repo rate from 11.25%, pushing real rates deeper into negative territory for locals with lira deposits after year-over-year inflation rose to 12.15% in January.
The median forecast was for a 50-basis-point cut shown in a Reuters poll. A rate increase was not among the forecasts, which ranged from no change to a 75-basis-point cut in the benchmark rate.
Inflation has dropped from a peak above 25% in the wake of a 2018 currency crisis that cut the Turkish lira’s value by nearly 30%. The subsequent brief recession saw economic growth all but disappear in 2019.
The central bank responded to the crisis by raising its policy rate to 24%, where it had stayed until last July.
For more daily news follow The European Magazine.