Turkish central bank cut the interest rate of repurchases by less than half:
About three years ago, Turkey faced a faltering Turkish economy, and this has resulted as we all witnessed a sharp decline in the value of the Turkish lira, and this has led to a rise in the rate of inflation, especially after mid-2018.
Inflation increased in June 2018 after the lira's decline. However, this faltering and stagnation in the Turkish economy did not last long and inflation fell from a peak of 25.2 in, to less than ten per cent before it reached 10.6 per cent in 2019.
Also, the economy witnessed a growth of 0.9% on an annual basis, in the third quarter of last year, to overcome the contraction that occurred for three consecutive quarters as a result of the financial crisis in the country, according to official data.
This stagnation and inflation have been avoided thanks to the Turkish government's steps that saved the situation by using a system of financial incentives, tax cuts and government bank lending, with the aim of restoring economic activity in the country, and especially in big cities.
The decline in foreign investment in various fields, especially in the trade and real estate in Turkey, was due to the fact that Turkey used to rely on foreign direct investment to achieve an annual growth of more than five percent.
In a series of steps to revive the economy that the Turkish government has followed, the Turkish Central Bank announced a rate cut after a meeting of the Monetary Policy Committee on Thursday.
The committee said in a statement that it decided to reduce the interest rate by 75 basis points on repurchases (repo) for a week to 11.25 percent.
The committee noted the continued improvement in inflation expectations. According to the Anadolu news agency.
They also said that the inflation trajectory is largely consistent with year-end forecasts. The committee lowered the interest rate from 12 to 11.25 percent.
The decision to cut interest on the local currency has been reflected as the Turkish lira exchange rate improved to rise again, and it is reported that the Turkish Central Bank has previously cut the interest rate from 14 to 12 percent of repurchase operations (repo) for a week at the end of the previous year.
Where the interest rate was reduced by 200 basis points from repurchases for a week, bringing the interest rate down from 14 to 12 percent at the time.
They also pointed out that the data announced recently in the Turkish market, shows the continued moderate recovery in economic activity.
It was emphasized that the net contribution of exports to growth continued during the first half of this year.
In addition to keeping the investments on track, the private consumption will gradually increase its contribution.
And the continued upward trend in exports of goods and services, due to developments in competitiveness, despite the weakness in the indicators of global growth.
It is also expected that net exports will continue to grow, and the gradual recovery in the economy will continue with the downward trend in inflation and improvement in financial conditions and the continuation of the improvement in the current account balance.
The reduction, which took place on Thursday, comes in line with the aspiration of Turkish President Recep Tayyip Erdogan to reach a single-digit interest rate in 2020.
It should be noted that in the past period and since the beginning of 2019, the Turkish Central Bank has cut interest rates four times since July, after the interest rate reached 24 percent after the currency crisis, which lost the Turkish lira about a third of its value in 2018.
In this context, Turkish Minister of Finance and Treasury Berat Albayrak said, in a speech to present the budget for 2020 in Parliament, that the country's economic program for the period 2020-2022, which was announced last September, aims to achieve an annual growth of five percent for each of the next three years.
"The time has come to unleash the potential of the Turkish economy, with a special focus on value-added production, technology and exports, which have not declined despite global trade contraction," said Anatolia news agency, quoting Berat Albayrak.
It is expected that in the coming period there will be devastations of funds from the treasuries of banks to the market and investments, which means moving the wheel of the economy and increasing production and the rate of growth, this matter must leave its impact in all Turkish markets, yes, of course, and will be in the interest of foreign investment in the country, including the real estate market in Turkey.