Turkish central bank continues rate cuts

Turkish central bank continues rate cuts

Overnight lending rate was cut by 50 basis points to 9.5 percent

ANKARA (AA) - The Turkish Central Bank on Wednesday cut its overnight lending rate by 50 basis points on Tuesday following recent cuts in the past two months and left other key rates on hold.

The overnight lending rate, which is the rate at which banks borrow from the Central Bank overnight, was cut 50 basis points to 9.5 percent.

The overnight borrowing rate, however, under which banks lend or deposit money to the Central Bank, remained unchanged at 7.25 percent.

The one-week repo rate, known as policy rate, was also kept at 7.5 percent, the bank said.

In late liquidity window interest rates (between 4.00 p.m. – 5.00 p.m.), the borrowing rate has been kept at zero percent, and lending rate has been reduced from 11.50 percent to 11 percent.

The bank said that positive developments from trade and the moderate course of consumer loans had helped the country to rein in the current account deficit while recovery of European economies had also supported exports.

However, the bank warned that a chronic problem in Turkey, inflation, was far from having been addressed and needed to be taken care of.

"Recently, inflation has displayed a marked decline, mainly due to unprocessed food prices. However, improvement in the underlying core inflation trend remains limited, necessitating the maintenance of a tight liquidity stance,” said the Central Bank in a statement.

“Future monetary policy decisions will be conditional on the inflation outlook,” it added.

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