Turkish Central Bank Slashes Interest Rate To 43%

(RTTNews) - Turkey's central bank lowered interest rates more than expected on Thursday in a bid to preserve the disinflationary conditions amid the uncertainty posed by trade war risks.

The Monetary Policy Committee, led by Governor Yasar Fatih Karahan, slashed the key interest rate to 43 percent from 46 percent, the CBRT said. Economists had forecast a reduction to 43.5 percent.

The overnight lending rate was cut to 46 percent from 49 percent and the overnight borrowing rate to 41.5 percent from 44.5 percent.

In June, the key interest rate was left unchanged. The previous change in the rate was a 350 basis points hike in April.

"The tight monetary policy stance, which will be maintained until price stability is achieved, will support the disinflation process through moderation in domestic demand, real appreciation in Turkish lira, and improvement in inflation expectations. Going forward, coordination of fiscal policy will contribute to this process," the bank said.

Policymakers will consider realized and expected inflation, and its underlying trend in a way to ensure the tightness required by the projected disinflation path, the bank said.

"The step size will be reviewed prudently on a meeting-by-meeting basis with a focus on the inflation outlook. All monetary policy tools will be used effectively in case a significant and persistent deterioration in inflation is foreseen," the bank added.