A Fifth Straight Large Rate Cut in Turkey

March 20, 2009

The Central Bank of Turkey cut its key rates yesterday by 100 basis points and indicated that an easing policy bias would likely be retained for “a considerable period.”  Previous rate cuts amounted to 100 basis points in November, 125 basis points in December, 200 basis points in January and 150 basis points in February.  A statement released by central bank officials said rates needed to be lowered to avoid a target-undershoot of inflation.  Disinflation is being promoted by international financial market problems, a worsening growth outlook, and the drop in commodity prices.  The central bank’s borrowing and lending rates are now at 10.5% and 13.0%, down 625 basis points from their peaks of 16.75% and 19.75%.  Another rate reduction in mid-April is very likely.

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


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