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Justin Kuepper

Turkey Cuts Interest Rates Amid Slowdown

By January 10, 2013

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Turkey's central bank cut its policy interest rate by 25 basis points, from 5.75% to 5.5% this week, suggesting that economic growth tops inflation as a chief concern. While the economy has recovered strongly from the Turkish Economic Crisis in 2000-2001, the central bank is navigating a tricky balancing act that could be difficult to successfully pull off.

Many economists were expecting a cut in overnight interest rates, but the country appears to be maintaining its "corridor" interest rate policy designed to provide commercial banks with greater flexibility. The iShares MSCI Turkey Index Fund (NYSE: TUR) moved higher on the news and is trading up nearly 7% this month and 70% over the past 52 weeks.

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