Turkish cenbank slashes borrowing rate to record low 7.25%, more cuts seen ahead

Kalliope Gourntis - 18.09.2009

Turkey’s central bank lowered its benchmark interest rates by 50 basis points, saying further cuts may lie ahead.

The borrowing rate fell to a historic low of 7.25% from 7.75% and the lending rate to 9.75% from 10.25%, CBRT Turkey said in a statement.

"The Committee reiterates that it will be necessary for the monetary policy to maintain an easing bias for a long period of time,” the bank's monetary committee reported.

“The size and the duration of the rate cuts will depend on the pace of the recovery in economic activity.”
Forseeing a slow, protracted recovery in domestic economic activity, monetary authorities expect inflation to remain low over a long period.

"External demand and domestic investment demand remain weak, while labor market conditions do not display a significant improvement. Moreover, consumption demand, after having increased markedly during the second quarter, is expected to display a weaker course in the third quarter."

Source: Balkans.com Business News