ANKARA, Nov 14: Turkey’s Central Bank on Wednesday slashed its key overnight borrowing rate by 50 basis points to 16.25 per cent on expectations that inflation will fall. It was the third time in three months that the rate has been reduced.

“Aggregate demand conditions continue to support the disinflation process,” the bank’s monetary policy committee said in a written statement.

“Despite risks in prices affected by energy and food, inflation is expected to continue to decelerate due to the effect of strong monetary tightening.” Turkey’s consumer inflation reached its lowest point in 37 years in July at 6.90pc, but then increased to 7.39pc in August amid fallout on international markets from a US credit crunch linked to risky home loans.

It slid back to 7.12 per cent in September before rising to 7.70 per cent in October.

Fighting inflation is a key element in an economic stability programme Turkey is implementing with the support of a $10bn loan from the IMF. The deal expires next year.—AFP