ANKARA
Interest rate cuts by the Turkish Central Bank on Tuesday have met with critiques from both government officials and business world.
The Central Bank of Turkey cut its benchmark policy rate by 25 basis points on Tuesday, and the overnight lending rate, or the upper band of the so-called Corridor, was cut to 10.75 percent from 11.25 percent.
But there is still mounting pressure for larger rate cuts from government officials and business associations.
“ I did not see courage in Central Bank’s last decision. The benchmark interest rate of Turkey should be below 7 percent and upper limit of the interest rate corridor should be less than 10 percent.” Economy Minister of Turkey Nihat Zeybekci said.
Another government official, Science, Industry and Technology Minister Fikri Isik also reacted: "There was a 50-basis-point reduction in upper limit of the interest rate corridor, but this did not fulfill our expectations. We have been waiting a more decisive reduction.” He said.
Nail Olpak, head of one of largest business associations in Turkey, MUSIAD, said that targeted GDP growth rates are impossible to reach with current rate reductions.
“The reduction on Tuesday fell short of market expectations,” he said.
Interest rates have been controversial for some time in Turkey as the central bank has kept a tight money policy to stem the slide in value of Turkish lira and to reduce inflation.
However many government officials including President Recep Tayyip Erdogan and business associations claim that the tight monetary policy of the bank is limiting growth which Turkey vitally needs.
