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Bank of Turkey Cuts Interest Rate by 0.5% to 8.5%, Lowest in More than Two Years

Turkey’s central bank has announced a rate cut, reducing its policy rate by 0.5 percentage points to 8.5%, the lowest level in more than two years. The decision was in line with market expectations and aims to boost the country’s economic recovery following the devastating earthquake that hit on February 6.

The earthquake, which impacted 10 provinces of Turkey, left scores of people dead and injured, and caused significant damage to infrastructure and homes. The disaster has taken a toll on Turkey’s economy, with estimates suggesting that it could cost up to $84.1 billion in damages.

According to a report by JPMorgan, the earthquake has directly cost Turkey’s economy an estimated 2.5% of its gross domestic product (GDP), or about $25 billion. The government will need to invest approximately $70.8 billion to repair homes and infrastructure, resulting in a loss of around $10.4 billion in revenue and $2.9 billion in lost work days.

The rate cut by the central bank is expected to provide some relief to households and businesses affected by the earthquake. Lower interest rates could stimulate borrowing and investment, supporting economic growth in the coming months.

The Confederation of Turkish Businesses and Enterprises has called for swift action by the government to address the damage caused by the earthquake and support affected communities. The government has already declared a state of emergency and launched relief efforts, but more will need to be done to address the long-term economic impacts of the disaster.

The rate cut by the central bank is one step towards supporting Turkey’s economic recovery, but more measures may be needed in the coming months to ensure that the country’s economy can rebound from the effects of the earthquake.

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