• Rate lowered by 50 basis points; third reduction since March
  • Bank’s one-week repo and overnight borrowing rates unchanged

Turkey’s central bank cut its overnight lending rate for a third month on Tuesday, calling the reduction a “measured” step toward simplifying its monetary policy.

The bank lowered the rate by 50 basis points to 9.5 percent, matching the median estimate in a Bloomberg survey. The one-week repurchase and overnight borrowing rates were kept at 7.5 percent and 7.25 percent respectively, the bank said in a statement.

The decision brings the reduction in the overnight lending rate -- the upper end of Turkey’s so-called interest rate corridor -- to 125 basis points since March. Governor Murat Cetinkaya said last month that cuts were part of the bank’s delayed plans to simplify its monetary policy framework, as falling global volatility diminishes the need for a wide rates corridor.

The bank has said policy simplification will mean a narrower corridor around the middle one-week repo rate.

The lira strengthened after the decision and was trading 0.9 percent higher at 2.9679 per dollar at 2:03 p.m. in Istanbul.

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