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Larger than expected rate cut raises pressure on Turkish lira

Turkey’s central bank surprised market watchers Wednesday with a significant interest rate cut to bolster the economy amid the coronavirus pandemic, though analysts say the move poses inflationary risks.
A board showing the currency exchange rates of the U.S. dollar and the Euro against Turkish lira is seen outside a currency exchange office in Istanbul, Turkey, May 23, 2019. REUTERS/Murad Sezer - RC1A6073F020

ISTANBUL — Surprising market analysts, Turkey’s central bank lowered interest rates more than expected Wednesday in a measure to bolster cheap credit and moderate the economic impacts of the global coronavirus pandemic.

Announcing the eighth interest rate cut in less than a year, the Monetary Policy Committee led by Turkey's central bank governor Murat Uysal reduced its one-week repo rate by 100bps to 8.75%, double the cut predicted by economists in a Bloomberg poll.

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