ANKARA: The Turkish central bank cut its main interest rate by half a percentage point on Thursday in an effort to give a boost to a slowing economy and stamp down a surging Turkish lire.
In an expected decision, the bank said it cut its benchmark rate to 4.5 percent in order to maintain financial stability. The move reflected similar rate cuts across the region.
Turkish Finance Minister Zafer Caglayan praised the cut, hoping the move would help boost internal demand with Turkey's exports hit by a sluggish world economy.
"International trade is turning out to be weaker in 2013 than in 2012," he said to Anatolia press agency.
The Turkish economy grew by 2.2 percent in 2012, short of the government forecast of 3.2 percent expansion.
This was a major slowdown from 2010 and 2011 when Turkish GDP jumped ahead by 8.9 percent and 8.8 percent respectively, drawing fears of overheating.
"We have hit the brake too hard," the minister said.
Economists from Capital Economics in London said rising internal demand "will drive the economy this year" but warned that "export growth, which kept Turkey out of recession in 2012, has already started to ease due to the weak global economy and tighter US sanctions on Iran."
Export-driven economies across eastern Europe, including Poland and the Czech Republic, have slashed interest rates in order to stimulate their faltering economies.
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