Turkish Central Bank cuts interest rates by 50 bps to new low

Hurriyet Daily News with wires

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The central bank also revised the lending rate, cutting it by 50 basis points to 11.75 percent, the statement said.  

"Foreign demand continues to be weak and internal investment demand is regressing. We believe recovery in economic activity and employment conditions will take time and downward pressures on inflation are expected to continue," it said.

The bank may opt for further "measured" rate cuts since financial conditions remain tight, the statement added.

Turkey’s 12-month inflation stood at 6.13 percent in April. The central bank has set its year-end inflation target of 7.5 percent but it is likely it will undershoot this.

Central bank governor Durmus Yilmaz announced last month that he expected inflation to be between 4.8 and 7.2 percent at the end of the 2009.

The central bank has cut interest rates by 7.50 percentage points since November as the global economic crisis began to hit Turkey.

The economy shrank 6.2 percent in the last quarter of 2008, giving it an overall annual growth rate of 1.1 percent following gains in the first three quarters.