Is Ankara capitulating to or allowing lira’s depreciation?
Turkey’s central bank shocks financial markets with a bigger-than-expected rate cut, overriding concerns over the slump of the Turkish lira and its bruising impact on the economy.
Turkey’s central bank cut its policy rate by a staggering 200 basis points Thursday, sending the embattled Turkish lira to a new all-time low and raising the specter of deeper economic turmoil in the country.
The bank’s monetary policy committee lowered its key one-week repo rate to 16% from 18%, heeding President Recep Tayyip Erdogan’s pressure for lower interest rates despite an annual inflation just shy of 20%. The move followed a 100-basis-point reduction in September and the dismissal of senior central bankers last week, which had already caused the lira to tumble.
