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18 March 2020
ECONOMY

Turkey cuts rates to single digits, unveils emergency steps

The Turkish central bank announced a series of measures aimed at mitigating the economic fallout, easing lenders’ access to lira and foreign-currency liquidity

Turkey’s seventh straight rate cut follows a crash in oil prices and comes as central banks around the world roll out stimulus measures to counter the pandemic/Bloomberg

by Bloomberg

Türkiye Cumhuriyet Merkez Bankası (TCMB), the Turkish central bank, has slashed its key interest rate by a full percentage point to single digits and announced a series of measures to boost liquidity amid the coronavirus outbreak.

TCMB stated that the Monetary Policy Committee agreed to cut the benchmark rate to 9.75 per cent from 10.75 per cent at an emergency meeting, bringing forward its meeting originally scheduled for 19 March 2020.

Governor Murat Uysal is mounting a monetary policy response with the outlook for global growth deteriorating and Covid-19 cases in Turkey on the rise. Turkey’s seventh straight rate cut follows a crash in oil prices and comes as central banks around the world roll out stimulus measures to counter the pandemic.

Policymakers reduced the amount of foreign exchange lenders must park at the monetary authority, effectively injecting $5.1 billion worth of hard currency and gold into markets.

Additionally, the central bank postponed $7.6 billion of foreign-exchange debt repayments by exporters by another three months, easing the short-term need for dollars in the domestic market.

The regulator encouraged lenders to extend credit to companies stricken by the virus spread, pledging cheaper liquidity in return. The monetary authority will provide liras at 8.25 per cent—1.5 percentage point lower than the benchmark rate—via a three-month repo facility to banks who comply with lending targets.

The government will extend as much liquidity as banks need through intraday and overnight standing facilities and may inject funds into the market through repo auctions with maturities of up to 91 days when needed.


RELATED STORIES: Türkiye Cumhuriyet Merkez Bankası Governor Murat Uysal Covid-19

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