Turkey’s Central Bank on March 17 lowered its key interest rate by 100 basis points to 9.75 percent in a policy committee meeting held two days earlier than scheduled, as it responded to the negative impact of the coronavirus on the global growth outlook.
In its seventh consecutive rate cut designed to boost economic growth, the bank cut its benchmark one-week repo rate from 10.75 percent.
The bank was set to meet on March 19, but amid fears of the coronavirus mounting, the meeting was brought forward.
In cutting its policy rate, the bank cited growing downside risks to the inflation outlook amid “a plunge in commodity prices” and “weakening demand conditions” given the hit from the coronavirus outbreak.
Central Bank opens gates to cheap lira liquidity
In a separate statement, the Central Bank also introduced further measures to maintain financial stability in the country, encouraging lenders to extend credit to companies stricken by the virus spread and pledging cheaper liquidity in return.
Accordingly, the Central Bank will provide liras at 8.25 percent via a three-month repo facility to banks who comply with lending “targets.” It will provide banks with as much liquidity as they need through intraday and overnight standing facilities.
It said that despite a recent slide in the lira, the sharp fall in international commodity prices will affect the inflation outlook favorably.
On March 16, Turkish authorities announced that the number of coronavirus cases in the country rose to 47.
The government took a series of precautions against the spread of the virus, including shutting down schools, universities, bars, nightclubs, cinemas, cafes, spas, amusement parks and swimming pools.