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For third straight month, Turkey cenbank cuts top end of rate corridor
May 24, 2016 / 11:06 AM / a year ago

For third straight month, Turkey cenbank cuts top end of rate corridor

ISTANBUL, May 24 (Reuters) - Turkey’s central bank cut the top end of its interest rate corridor by an expected 50 basis points on Tuesday, its third straight month of cutting and a sign new Governor Murat Cetinkaya may continue to take a dovish stance.

The bank lowered the overnight lending rate - the highest of the multiple rates it uses to set policy - to 9.5 percent. However, it left its benchmark rate on hold at 7.5 percent.

It marks the third straight month of easing and the second cut under Cetinkaya, an Islamic finance expert who took over as governor last month.

Eleven out of 18 economists in a Reuters poll expected a 50 basis point cut in the upper band. Inflation cooled to 6.57 percent last month, its lowest in almost three years, although it still remains well above the bank’s 5 percent target.

President Tayyip Erdogan has repeatedly argued against the high cost of credit in Turkey, equating high interest rates with treason. His advisers have recently called for more sustained rate cuts, increasing concern about pressure on the central bank.

The bank also kept is overnight borrowing rate steady at 7.25 percent. (Reporting by Daren Butler; Writing by Seda Sezer; Editing by David Dolan and Ralph Boulton)

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