Turkish Central Bank Cuts Interest Rate Sharply Despite Weaker Lira
2020年4月22日 - 5:31PM
RTTF2
Despite a weaker currency exchange rate, Turkey's central bank
reduced its key interest rate by a sharp 100 basis points to
mitigate the economic fallout from the coronavirus outbreak.
The Monetary Policy Committee of the Central Bank of the
Republic of Turkey, led by Governor Murat Uysal, cut the policy
rate, which is the one-week repo auction rate, to 8.75 percent from
9.75 percent. Economists had expected only a 50 basis point
reduction.
This was the third rate cut so far this year. At an emergency
meeting in March, the bank had reduced rate by 100 basis points and
announced a series of measures to provide liquidity and credit to
companies.
In order to contain negative effects of the pandemic on the
Turkish economy, it is of crucial importance to ensure the healthy
functioning of financial markets, the credit channel and firms'
cash flows.
Policymakers said risks to the year-end inflation projections
are on the downside.
In March, inflation slowed to 11.86 percent from 12.37 percent
in February, driven by the decline in oil prices. The bank had
earlier projected inflation to ease to 8.2 percent by the end of
the year.
The central bank said it will continue to use all available
instruments in pursuit of the price stability and financial
stability objectives.
The bigger-than-expected rate cut has added further selling
pressure on the Turkish lira. The central bank may have to step in
to limit the weakness in currency.
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