January 20, 2020 / 8:15 AM / a month ago

Turkey's negative real rates affect cenbank credibility -Moody's

ISTANBUL, Jan 20 (Reuters) - Turkey’s newly negative real interest rates will likely harm the central bank’s credibility, risk hitting investor confidence and amount to a credit negative for banks’ funding, ratings agency Moody’s said on Monday.

The central bank cut its policy rate by 75 basis points to 11.25% last week, which Moody’s said brought real yields into negative territory given inflation stood at 11.84% in December.

Moody’s added that a recovery in Turkey’s real estate sector is credit positive for banks as it will reduce problems loans and loan-loss provisions, while increasing lending volumes. (Reporting by Ali Kucukgocmen; Editing by Jonathan Spicer)

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