Turkey's central bank cuts policy interest rate by 425 bps

Source: Xinhua | 2019-07-26

Turkey's central bank lowered its benchmark interest rate by 425 basis points on Thursday, an expected move aiming to stimulate the ailing economy.
The policy rate, or the one-week repo rate, fell to 19.75 percent from 24 percent.
The Monetary Policy Committee of the central bank said in a statement on Thursday that "the committee assessed maintaining a sustained disinflation process is the key for achieving lower sovereign risk, lower long-term interest rates, and stronger economic recovery."
The decision came as no surprise as Turkish President Recep Tayyip Erdogan clearly hinted at such a move last month after dismissing former governor of the central bank Murat Cetinkaya, replacing him with his deputy Murat Uysal.
Earlier experts predicted a rate cut between 200 and 400 basis points.
The main policy rate remained on hold at 24 percent since September 2018, when the bank increased massively its policy rate by 625 basis points in order to prop the spiraling Turkish lira after a diplomatic row with the United States triggered a currency crisis.
The lira lost about 30 percent of its value against the dollar last year, before stabilizing in recent months as did also the inflation, easing to some 15 percent in July, down from a 15-year high of 25 percent in October.