Home ›› 26 Oct 2021 ›› World Biz
Turkey's three big state banks cut interest rates on Monday on an array of loans by up to 200 basis points, following a surprisingly sharp policy easing by the central bank last week.
Ziraat Bank, Halkbank and Vakif Bank announced their moves in a joint statement, confirming a Reuters report on Sunday.
The rate cuts set the stage for cheaper commercial, individual and mortgage loans, even as inflation has risen to near 20 per cent, well above an official 5 per cent target.
"As they have done until now, our banks will continue to stand beside our customers and companies, contributing to the strengthening of our country's economy and employment," the lenders said, adding rates would depend on products and maturities.
Citing three sources familiar with the plan, Reuters reported on Sunday that the state banks were expected on Monday to cut borrowing costs by some 200 basis points.
Analysts said the move could support some borrowers but also exacerbate pressure on the lira and the economy, given that Turkey's benchmark bond yields shot up after the central bank slashed its policy rate by 200 points to 16 per cent last week.
State banks aggressively expanded credit last year to ease pandemic fallout. Economists said the stimulus stoked inflation and prompted the monetary tightening cycle that began in September of 2020.
Public lenders' loan growth has been muted this year and Turkish President Tayyip Erdogan has publicly called for lower interest rates in order to boost credit and the economy. The central bank, predicting that inflation pressure is temporary, began cutting rates last month, initially by 100 points, sending the lira to a series of all-time lows.
Some private lenders say they are hesitant to boost credit given the risks of stoking an economy expected to grow at nearly 10 per cent this year, and possible defaults on companies' foreign currency debt.
The chief executive of private lender Isbank , Hakan Aran, said in a televised interview on Sept. 29 that credit costs will not fall unless inflation is brought down first.