Turkey has surprised markets with a 100 basis point interest rate cut despite inflation of nearly 80 per cent, as the central bank loosens policy further to spur growth ahead of a general election next year.
The bank had been expected to keep the rate at 14 per cent, which has already pushed Turkish yields into deeply negative territory, according to a poll by broadcaster Bloomberg HT. Instead, policymakers lowered the rate to 13 per cent, saying they were concerned about the possibility of slowing economic growth.
“Leading indicators for the third quarter point to some loss of momentum in economic activity,” the bank said in a statement on Thursday. “It is important that financial conditions remain supportive to preserve the growth momentum in industrial production, and the positive trend in employment in a period of increasing uncertainties regarding global growth as well as escalating geopolitical risk.”