Turkey’s central bank cut its overnight lending rate for a sixth month, while maintaining the slower pace of easing introduced after last month’s attempted coup.
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Given low inflation, the central bank can consider the time for tightening to be a way off, and can try to drive general interest rates down using means other than a rate cut.
The Monetary Policy Committee of the Central Bank of Iceland chose to reduce the rate on seven-day term deposits to 5.25 percent from 5.75 percent.
The attempted coup on July 15 and its aftermath have increased uncertainty for investors and sent Turkey´s lira to record lows against the dollar, although the currency has since recovered nearly to pre-putsch levels.
The central bank, in a statement announcing the rate moves, said that since July’s instability pressures have eased on Turkish market indicators, in part because of what it described as an “improved global risk appetite”.
In a bid to stimulate lending, the bank cut minimum reserve requirements for commercial banks in early August. Sixteen of these economists expected this rate cut to be 25 base points, while only one economist expected a 50 base-point cut.
The banking sector gave a concrete reaction to the CBRT’s series of interest rate cuts by lowering the monthly interest rate cuts on home loans.
The lira was trading 0.2 percent higher at 2.9360 per dollar at 2:02 p.m.in Istanbul.
“The Central Bank keeps taking rational decisions”, he added.
It also forecast a stable course of growth for the country, led by continued demand for Turkish exports in Europe as well as heightened domestic consumer spending.
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“The prospects for significant structural reform that would shift the structure of growth from private consumption have diminished”, Fitch said in its statement, as reported by Reuters, emphasizing some pressure over the Central Bank and lenders to cut rates. This news story is related to Print/144691-Turkey-cuts-rates-again-despite-ratings-worries/ – breaking news, latest news, pakistan ne.
