The Central Bank of the Republic of Turkey cut its benchmark 1-week repo rate by 50 basis points to 5.75% from 6.25% after holding an emergency meeting. The Bank also moved to increase the overnight borrowing rate to 5.00% from 1.50%, but kept the lending rate unchanged at 9.00%. The Bank said: "Concerns regarding sovereign debt problems in some European economies and the global growth outlook have continued to intensify, increasing the risks highlighted in the July Committee meeting." On the rate cut the bank said it was intended "to reduce the risk of a domestic recession that may be caused by the heightened problems in the global economy."
The Turkish central bank held its benchmark interest rate unchanged during its July meeting this year, the bank last cut its benchmark interest rate by 25 basis points to 6.25% in January this year. The Turkish central bank also adjusted required reserves in late July. Turkey reported annual consumer price inflation of 6.2% in June, off from 7.2% in May, but up from 4.26% in April, and 3.99% in March, and above the Bank's full year inflation target of 5.5%. The Turkish Lira dropped over 2 percent following the announcement, and is trading around 1.73 against the US dollar.