Turkish central bank cuts policy interest rate

Turkey's Central Bank slightly cut the policy interest rate 50 basis point to 7.75 percent on Tuesday.

The Monetary Policy Committee decreased one-week repo rate, the policy rate, to 7.75 percent from 8.25 percent, the central bank said in a press statement on Tuesday.

The committee has decided to keep overnight interest rates. The bank keep overnight lending rate at 11.25 percent, overnight borrowing rate at 7.5 percent and overnight rate for primary dealers via repo at 10.75 percent.

"The current tight monetary policy stance and macroprudential measures impact positively on inflation expectation," the statement said.

Turkey's central bank raised the interest rates aggressively and nearly doubled rates in Jan. 2014.

The bank raised its overnight lending rate to 12 percent from 7.75 percent and its overnight borrowing rate to 8 percent from 3.5 percent due to the "significant depreciation in the Turkish lira and a pronounced increase in the risk premium."

President Recep Tayyip Erdogan has voiced a sharp cut call. He reiterated his criticism on the bank on Friday, saying that "high interest rates is the biggest obstacle against investments."

Erdogan's remarks is supported by Economy Minister Nihat Zeybekci, who said on Friday that in the light of Turkey's positive economic expectations for 2015, current interest rates imposed by the Central Bank are unreasonable.

Deputy Prime Minister Ali Babacan said bank's monetary policy committee would consider all developments and would make a reasonable decision, adding that "in principle, we don't tell the bank what has to do." Endit