Turkey's Central Bank cuts overnight lending rate

ANKARA (AA) – Turkey’s Central Bank on Tuesday cut its overnight lending rate by 25 basis points following recent reductions in the last three months.

The overnight lending rate, which is the rate at which banks borrow from the Central Bank overnight, went from 9 percent to 8.75 percent.

However, Turkey’s overnight borrowing rate, under which banks lend or deposit money to the Central Bank, remained unchanged at 7.25 percent.

The one-week repo rate, known as policy rate, was also kept at 7.5 percent, the bank said.

In late liquidity window interest rates (between 4.00 p.m. - 5.00 p.m.), the borrowing rate has been kept at zero percent and the lending rate has been reduced from 10.50 percent to 10.25 percent.

In a statement, the bank said: "Recently, domestic developments have led to fluctuations in financial markets. The Committee assesses that the recent liquidity measures have alleviated the volatility in financial markets.

"Moreover, the tight monetary policy stance, cautious macro-prudential policies and the effective use of the policy instruments laid out in the road map published in August 2015 have increased the resilience of the economy against shocks.

“Also, considering its contribution to the effectiveness of monetary policy, the Committee decided to take a measured and cautious step towards simplification."

The bank added that the developments in inflation outlook necessitate the maintenance of a tight liquidity stance.