Turkey’s central bank slashed its benchmark interest rate, marking a shift in direction after the sacking of the former governor by President Recep Tayyip Erdogan.

The bank’s monetary policy committee reduced the one-week repo rate from 24 per cent to 19.75, slicing 4.25 percentage points off the cost of funding.

Analysts’ expectations had ranged widely prior to the meeting, but the overnight forward implied yield on the lira had suggested that investors were pricing in a rate cut of about 2.50 percentage points, according to Bloomberg.

Thursday’s decision was seen as a key test of Murat Uysal, the new central bank governor, who assumed the role earlier this month after Mr Erdogan sacked his predecessor following a row over the pace and depth of rate cuts.

The Turkish president, who is a vocal opponent of high interest rates, said that former governor Murat Cetinkaya “wouldn’t follow instructions”.

Via Financial Times

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