Turkey Cuts Interest Rate to 8.75% despite Lira Fall

The Turkish central bank on Wednesday cut its main interest rate again by a full percentage point to 8.75 percent despite a fall in the Turkish lira's value against the U.S. dollar.

The one-week repo auction rate was trimmed by one percentage point, it said, marking the eighth consecutive cut in less than a year.

The Bloomberg consensus was for a reduction of 0.5 percent.

The lira has been declining against the greenback since the coronavirus crisis began earlier this year, losing more than six percent in value in the past month.

The Turkish currency stood at 6.99 to the dollar after the bank's announcement.

The bank acknowledged the lira's decline but said the continued sharp fall in international commodity prices including crude oil "affects the inflation outlook favorably."

It reiterated that "risks to the year-end inflation projection are on the downside", as annualized inflation fell last month to 11.86 percent from 12.37 percent in February.