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After failed coup, Turkey's cenbank cuts rates again

Turkish central bank cuts interest rate

Turkey's central bank cut interest rates for the fifth straight month on Tuesday, lowering its overnight lending rate by an expected 25 basis points days after a failed coup shook the country and briefly roiled its financial markets.

The bank cut the highest of the multiple interest rates it uses to set policy to 8.75 percent. It left its benchmark one-week repo rate unchanged at 7.5 percent. Eight of 19 economists in a Reuters survey forecast a 25 basis point cut in the upper band, while six expected a cut of 50 basis points. The remaining five predicted no change.

People gather in front of Parliament House to listen to official speeches during a rally in reaction to the attempted military coup on July 16, 2016 in Ankara, Turkey.
Chris McGrath | Getty Images

Economy Minister Nihat Zeybekci told Reuters in an interview late on Monday he expected the central bank to continue with "bold" rate cuts, adding he would understand if it hesitated following Friday's failed coup.

The central bank has responded to the government's repeated calls for cheap credit. President Tayyip Erdogan, who favours consumption-led growth, has equated high borrowing costs with treason.

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