Turkish Central Bank lowered interest rate on overnight deposits for the sixth consecutive month by 25 basis points to 8.5%, despite high inflation and concerns about possible credit downgrades. The regulator left the interest rate on one-week repo unchanged at 7.5%.
Turkish President Recep Tayyip Erdogan, who wants stronger growth based on consumption, made repeated calls for cheaper credit. He called on lenders to keep interest rates low after the unsuccessful coup and promised to take measures against banks, which deviate from the right path. Recep Tayyip Erdogan also said that the announcement of bank loans to prematurely claimed without sufficient reason would be a betrayal.
The attempted coup of July 15 and its effects increased insecurity in the country. The international rating agency Fitch Ratings on Friday downgraded the outlook for the rating of Turkey to negative level, which indicates a deterioration in the creditworthiness of the country.
Moody’s announced on July 18 that puts the country’s rating in the list downward revision.
Shortly after reduction of interest rates, the currency dropped on the international markets.