Turkey’s central bank cut its key interest rate by a full percentage point to single digits and announced a series of measures to boost liquidity amid the coronavirus outbreak, Bloomberg reported.
The benchmark rate was cut to 9.75 percent from 10.75 percent at an emergency meeting, the central bank said on Tuesday. The Monetary Policy Committee brought forward its meeting originally scheduled for March 19 to discuss the “potential economic and financial impact” of the coronavirus, the central bank said on its website.
Central Bank Governor Murat Uysal is mounting a monetary policy response with the outlook for global growth deteriorating and Covid-19 cases in Turkey on the rise. Turkey’s seventh straight rate cut follows a crash in oil prices and comes as central banks around the world roll out stimulus measures to counter the pandemic.
Turkey’s central bank also announced a series of measures aimed at mitigating the economic fallout, easing lenders’ access to lira and foreign-currency liquidity.
Policy makers reduced the amount of foreign exchange lenders must park at the monetary authority, effectively injecting $5.1 billion worth of hard currency and gold into markets.
Additionally, the central bank postponed $7.6 billion of foreign-exchange debt repayments by exporters by another three months, easing the short-term need for dollars in the domestic market.
The bank encouraged lenders to extend credit to companies stricken by the virus spread, pledging cheaper liquidity in return. The monetary authority will provide liras at 8.25 percent — 1.5 percentage point lower than the benchmark rate — via a three-month repo facility to banks who comply with lending “targets.”
Policy makers will extend as much liquidity as banks need through intraday and overnight standing facilities and may inject funds into the market through repo auctions with maturities of up to 91 days when needed, it said.