Turkey sees economic slowdown, falling inflation, minutes report

By Richard Connell

New York, Jan. 2 - The Monetary Policy Committee of the Central Bank of Turkey cut its overnight borrowing rate by 125 basis points to 15% at its meeting on Dec. 18 in response to an expected decline in inflation, according to minutes released on Tuesday.

The committee noted that annual inflation declined to 10.76% in November caused by falling food and energy prices, but remained well above the inflation target of 7.5%.

The committee focused on the continued slowdown of the Turkish domestic economy, as reflected in a decline in demand, investments and consumer confidence.

The ongoing global financial crisis was also addressed, as it was noted that lessened foreign demand has adversely affected Turkish exports.

The committee deemed that the economic slowdown will continue for an extended period, leading to continued disinflation, and thus voted to lower the overnight rate to 15%.

The rate has now been cut by 175 basis points total over the past two months.

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