All about business

Turkey’s central bank will probably reduce the benchmark interest rate to a record this week, the fifth consecutive cut, as manufacturing plummets and unemployment rises.

The overnight borrowing rate will be lowered by a percentage point to 10.5 percent, according to the median estimate of 17 economists surveyed by Bloomberg. Forecasts ranged from a half point to a point-and-a-half reduction. The Ankara-based bank will announce its decision at 7 p.m. on Thursday.

Governor Durmus Yilmaz has cut a total 5.25 percentage points from the rate in the last four months, joining monetary authorities worldwide in reducing the cost of borrowing as the global crisis sends industrial output and inflation tumbling.

“This will be an important decision that may give us some signal about when the central bank will decide to pause the easing,” said Sengul Dagdeviren, chief economist at ING Bank AS in Istanbul. “For the moment, however, it’s very clear that Durmus Yilmaz wants to carry on cutting on the basis of sharp falls in growth and in inflation.”

Inflation slowed in February to 7.7 percent, the lowest rate in a year-and-a-half. The bank’s goal for the end of the year is 7.5 percent and Yilmaz said on Jan. 26 that overshooting the goal would be “at the cost of falling output and rising unemployment online payday loans.”

Rising Jobless

Industrial output slumped 21.3 percent in January, the most since 1986 when the statistics agency began producing monthly data. Unemployment hit a four-year high of 12.3 percent in November. The agency will release unemployment figures for December today.

The economy grew 0.5 percent in the third quarter of 2008, the slowest pace in more than six years. The IMF forecasts a 1.5 percent contraction in 2009.

Turkey is seeking IMF support to help finance its current account deficit. The two paused negotiations on Jan. 26 in a dispute over budget planning and the fund said on March 12 that it had submitted a revised set of proposals to Turkey.

The official statistics agency will also today release figures for February consumer confidence at 10 a.m.

The benchmark ISE National 100 Index rose 1.7 percent last week to 23,615.25. The lira gained to 1.7143 per dollar as of 5:56 p.m. on March 13 from 1.7902 a week earlier. The yield on the benchmark lira bond tracked by ABN Amro declined to 14.59 percent from 15.34 percent.

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