Turkey lowers key interest rate despite earthquake
Turkey's central bank on Thursday continued its policy of cutting its key interest rate, even as the country struggles with high inflation and the aftermath of a devastating earthquake.
The bank's monetary policy committee said it had cut the key interest rate by 0.5 percentage points to 8.5%. Turkey's central bank had cut the key rate by 5 percentage points to 9% between August and November, but had left rates unchanged since then.
The cuts were made despite high inflation in the country, currently 57.68%, which has caused a cost of living crisis. Central banks around the world have raised interest rates to combat inflation in their countries.
The Central Bank said the quake would have no impact on the Turkish economy in the medium term.
"The impact of the earthquake on production, consumption, employment and expectations is currently being studied in detail," the bank said in a statement. "While the earthquake is expected to affect economic activity in the short term, it is not expected to have a lasting impact on the performance of the Turkish economy in the medium term
The interest rate cuts are in line with President Recep Tayyip Erdogan's unorthodox economic views that high borrowing costs lead to high inflation, although traditional economic thinking is that raising interest rates helps curb inflation.
Earlier this month, Erdogan criticized interest rate hikes by central banks around the world, signaling his intention to cut rates further.