April 16 (Bloomberg) -- Turkey’s central bank cut its benchmark interest rate by three-quarters of a percentage point, its sixth consecutive reduction, as industrial output slumped and the number of jobless rose by more than a million.

The bank in Ankara lowered its overnight borrowing rate to a record 9.75 percent, according to an e-mailed statement today. The bank had been forecast to cut the rate by half a point, according to the median estimate of 18 economists surveyed by Bloomberg. Minutes of the meeting will be released within eight working days.

The cut means the bank has shaved 7 percentage points from the benchmark rate in sixth months as it tries to minimize the impact of the global recession. Turkey’s economy contracted 6.2 percent in the fourth quarter of 2008, the first decline in seven years.

The bank’s move was “a bit more dovish than I’d expected,” said Yarkin Cebeci, an economist for JPMorgan Chase & Co. in Istanbul. “They are pointing to another cut and it could be more measured than this one.”

Future rate reductions will be “measured,” the bank said in statement accompanying the decision, reiterating that the easing bias “may need to be maintained for some time.”

The Turkish lira weakened against the dollar, trading at 1.6054 per dollar in Istanbul at 7:12 p.m. compared to 1.6028 before the decision.

‘Even Worse’

The size of the cut suggests the bank thinks the “situation is even worse than it was when they met last month,” said Inan Demir, an economist at Finansbank AS in Istanbul, speaking before the decision.

Unemployment rose to 15.5 percent in January, the most since records began in 2005. The number of jobless people jumped to 3.7 million from 2.6 million a year earlier.

Turkey and the International Monetary Fund are discussing a possible loan agreement to help buttress the economy against the global recession. The two have been holding talks on a new financial support arrangement since a $10-billion loan accord ended in May.

The bank believes it can to encourage growth and job creation without causing an acceleration in inflation, Governor Durmus Yilmaz said on April 14.

Expectations for inflation in 12 months fell to 6.78 percent from 6.79 percent, the central bank said in its biweekly survey of economists and businessmen on April 9. Yilmaz is aiming for inflation of 7.5 percent at the end of the year.

Inflation accelerated to 7.9 percent in March from 7.7 percent in February after four months of declines.

Falling prices for oil and other commodities mean consumer- price growth may slow more rapidly in the coming months, the bank said in today’s statement.

To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net.

Last Updated: April 16, 2009 12:19 EDT