Turkish central bank cuts policy rate 50bps after earthquake

ISTANBUL, Feb 23 (Reuters) - Turkey's central bank lowered its policy rate by 50 basis points to 8.5% on Thursday, as expected, following a devastating earthquake that killed more than 43,000 people in southern Turkey this month. Last year the bank cut its key rate by 500 basis points in an unorthodox easing cycle designed to counter an economic slowdown, before keeping it steady at 9% in December and January. The stimulus came even as inflation soared above 85% last year and dipped only to 58% in January.

Even before the quakes, analysts said there could be more easing ahead of presidential and parliamentary elections due to be held by June, where President Tayyip Erdogan is expected to face the biggest political challenge of his two decades' rule. Erdogan has urged monetary stimulus over the last several years.

In a Reuters poll of 17 economists, the median forecast was for a 50-basis-point cut to minimise the economic impact of the earthquake. Nine economists expected a cut in the policy rate of up to 200 basis points, while eight institutions expected the rate to be kept steady. Business groups and economists have said the earthquake could cost Ankara up to $100 billion to rebuild housing and infrastructure, while shaving one to two percentage points off economic growth this year. (Reporting by Ezgi Erkoyun and Daren Butler; Editing by Jonathan Spicer)

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Reuters

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Turkish central bank cuts policy rate 50bps after earthquake

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