Turkiye's Central Bank Cuts Policy Rate by 50 Basis Points

"It has become even more important to keep financial conditions supportive to preserve the growth momentum in industrial production and the positive trend in employment after the earthquake," the bank said in a statement.

The current monetary policy stance after the measured reduction is adequate to support the necessary recovery in the aftermath of the earthquake by maintaining price stability and financial stability, said the statement.

While the earthquake is expected to affect economic activity in the near term, it is anticipated that it will not have a permanent impact on the performance of the Turkish economy in the medium term, it said.

The central bank had kept the interest rate at 14 percent last year and started to lower it as of August. In November last year, the bank ended its four-month easing cycle in benchmark rate with a cut by 150 basis points to 9 percent and kept it unchanged until the new decision.

Turkish President Recep Tayyip Erdogan supports low-interest rates in hope of boosting economic growth and employment.

The monetary policy has weakened the Turkish lira by more than 55 percent since September 2021 and fueled a flight from the currency.

Erdogan, seeking another term in office in this year's elections, has repeatedly defended his unconventional economic policies, promising that the country will "overcome" the inflation problem in 2023.

Turkish annual inflation eased for a third month in a row, recording 57.68 percent growth in January.

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