Both exporters and finance experts demand lower interest rates to increase the pace of growth and strengthen competitive power in global markets. For exporters, this is evident in a poll conducted by the Turkish Exporters Assembly (TİM), covering the first quarter results and expectations for the second quarter. Accordingly, 64 percent of exporters expect the Central Bank of the Republic of Turkey (CBRT) to continue to lower interest rates, thus lowering credit costs to help push export volumes up and increase competitiveness globally.
Furthermore, Turkish Banks Association (TBB) Chairman Hüseyin Aydın said the banking sector wants interest rates to decrease because high interest rates create huge borrowing costs, curbing capital growth rates. Continuing to cut interest rates would lead to more reasonable and transparent fees to be implemented, according to Aydın, who delivered a speech at the TBB's 59th Ordinary Meeting on Friday.
This week, the CBRT reduced the upper band of the interest rate corridor (the marginal funding rate) 50 base points from 10 percent to 9.50 percent, while leaving the policy rate (one-week repurchase agreement rate) and the lower band (borrowing rate) unchanged at 7.50 percent and 7.25 percent, respectively. The move was in line with market expectations. Thus, the CBRT lowered the upper band 1.75 percent over the past four months.