50-Basis Point Turkish Rate Cut Meets Expectations

August 18, 2009

The Central Bank of the Republic of Turkey cut its overnight borrowing and lending rates by 50 basis points each to 7.75% and 10.25% and reiterated the belief that further measured cuts will likely be made in the absence of a robust recovery.  This was the fourth consecutive month with a cut of 50 basis points, and total central bank rate reductions since November 19th now sum to a staggering 900 basis points.  A statement from the central bank projects a soft recovery and low inflation for a long period of time.  Financial conditions are still tighter than normal.  Turkish real GDP fell 13.8% in the year to 1Q09, and industrial production was 9.7% lower in June than a year earlier.  On-year CPI inflation slowed to 5.4% in July from 12.1% in the previous statement year.

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

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