Turkey cuts main interest rate as currency no longer under as much pressure in markets

ANKARA, Turkey – Turkey’s central bank has cut its main interest rate as a decrease in financial market jitters no longer require it to support the currency as aggressively as before.

Higher interest rates can support a currency but also weigh on economic growth.

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

The central bank said Thursday it cut the one-week repo rate to 9.5 per cent from 10 per cent. It said it would keep a tight stance on monetary policy until it saw improvements in inflation.

The government has been pressuring the central bank to keep rates low to shore up growth.

The Turkish Lira weakened slightly Thursday, trading at 2.09 against the dollar.