Turkish central bank cuts key rate to help economy, as market pressure on currency eases

 

ANKARA, Turkey – Turkey’s central bank has cut its main interest rate by 0.75 percentage points, undoing some of the rate increases it took in recent month to support the falling national currency.

In January, the bank aggressively raised rates to support the currency, which had fallen sharply amid uncertainty in global markets and risked boosting inflation.

As the rate increases threatened to slow the economy, the government of Prime Minister Recep Tayyip Erdogan has been pressuring for a big rate cut.

The central bank on Tuesday cut its main rate, the one-week repo rate, to 8.75 per cent from 9.5 per cent.

The bank said economic growth conditions in 2014 would help limit inflation and predicted an improvement in the current-account deficit.

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