Turkey slashes policy rate by 50 basis points as country continues to reel from earthquake

Turkey’s central bank on Thursday slashed its policy rate by 50 basis points from 9% to 8.5% as the country continues to reel from the aftermath of a devastating quake which affected millions of lives.

The move, which marks a resumption of a series of interest rate cuts in 2022 in spite of high inflation, was in line with Reuters’ expectations and is the lowest one-week repo rate in more than two years, according to Refinitiv data.

Two consecutive quakes rocked Turkey and Syria earlier this month, and were the region’s strongest in nearly a century with a death toll of more than 46,000 lives thus far.

The country’s most recent inflation rate in January stood at 57.68%.

Turkey’s monetary policy is premised on a pursuit of growth and export competition rather than soothing inflation. Turkish President Recep Tayyip Erdogan espouses the unorthodox view that raising interest rates increases inflation, rather than taming it. The policy dramatically weakened Turkey’s currency last year.

The Turkish lira held steady at 18.87 against the greenback following the central bank decision.

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