Rate Cuts in Turkey (75 bps) and The Philippines (25 bps)

April 16, 2009

A sixth round of rate cuts has been implemented by the Central Bank of the Republic of Turkey, the borrowing rate lowered by 75 basis points to 9.75%.  Previous cuts were made on March 19 of 100 bps, February 19 of 150 bps, January 15 of 200 bps, December 18 of 125 bps and November 19th of 100 basis points.  The key lending rate was also lowered by 75 bps to 12.25%. A statement by the central bank mentions the continuing world financial market problems and asserts that today’s and possible additional future cuts are necessary to avert significantly undershooting the inflation target as disinflation gains pace and financial conditions retain their tightness.  The size of today’s rate cut falls around the mid-range of analyst expectations.

The Central Bank of The Philippines reduced its borrowing rate to 4.5% from 4.75% as had been expected.  The rate was also cut by 25 basis points in March and by 50 bps apiece on January 29 and December 18th.  While the Philippine statement mentions some areas of economic improvement, disinflation continues.  Officials have revised the path of expected inflation downward and to within the borders of its target.  Risks to the inflation forecast are skewed to the downside, however.

Copyright 2009 Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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