The decision came after a Monetary Policy Committee (PPK) meeting on Thursday. In an assessment of the central bank decision, Halk Bank General Director Süleyman Aslan said the banks have carried Turkey to another economic league by implementing bold and necessary policies, indicating that the time of high interest rates has come to an end. Some of the banks were against a cut in interest rates. “However, the central bank has more data than those banks. If necessary they can lower the rate. Turkey’s growth rate is lower than its potential; we are only expecting 3.5 percent growth in 2010. So there will be no pressure from this [cut in interest rates] on inflation,” he said.
A statement released by the PPK on Thursday noted that the latest economic indicators are in line with the committee’s forecast and that recovery from the crisis, which is currently taking place, will happen slowly and gradually. Moreover, demand has become weaker following a significant rise in the second quarter. “We believe that a permanent improvement in the employment rate will take quite a long time. Low rates of inflation are expected to continue.” the statement said.
The cut is the 11th the bank has made since interest rates were 16.75 percent last November to stimulate an economy hit hard by the global economic crisis. The central bank has cut interest rates by 8.5 percent over the last year.
On the other hand, the recent rate cut pleased exporters. Turkish Exporters Assembly (TİM) President Mehmet Büyükekşi expressed his approval over the cut in interest rates, criticizing the bank’s “high interest rate, low exchange rate” policy of previous terms.
