Turkish Central Bank

Turkish Central Bank cuts interest rates to help the economy

After an extraordinary meeting, the Central Bank of Turkey applied its 7th interest rate cut in less than a year to stimulate the economy in the face of the coronavirus crisis.

The Central Bank of the Republic of Turkey (TCMB) announced on Tuesday a cut in its interest rates by 100 basis points after an extraordinary meeting of its Monetary Policy Committee called to curb the consequences for the Turkish economy of the coronavirus outbreak.

The 100 points cut announced today – the 7th consecutive since July 2019 – leaves the benchmark interest rate at one week at 9.75% compared to previous 10.75%, and aims to alleviate volatility in the markets and stimulate consumption and economic growth.

The meeting, initially scheduled for two days from now, was brought forward to this Tuesday due to the advance of the disease and the collapse of stock markets around the world, which has led institutions such as the IMF to warn countries that they should increase fiscal stimuli to the same levels as after the 2008 global crisis.

At its meeting today, the Monetary Policy Committee justified its decision to cut rates by noting that despite the recent drop in the Turkish lira, the widespread collapse in world prices for goods combined with a slowdown in the global economy will cause inflation in Turkey to drop more than expected.

“To contain the negative effects of the coronavirus pandemic on the Turkish economy, it is of crucial importance to ensure a healthy functioning of financial markets, and the flow of capital in credit channels and in companies,” reported the Turkish Central Bank , which also guaranteed that it will provide Turkish banks with all the liquidity they may need.