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ANKARA, April 17 (Xinhua) -- The decision of Turkey's central bank to shave the main interest rate off by 50 basis points was seen by analysts1 as a bid to stimulate2 growth.
"Domestic demand was weak and the bank wanted to provide stimulus3 to the economy by slashing5 rates," Huseyin Sumer, an economist6, told Xinhua.
Turkish statistics agency announced earlier this month that the country's economy grew by 2.2 percent in 2012, falling short of the projected 3.2 percent.
The central bank has been trying to spur the economy since mid- 2012, starting with a rate cut in December last year. As the first quarter growth is expected to reach 3 percent, the bank moved more aggressively on Tuesday by lowering key interest rate by 50 basis points.
However, analysts are concerned that growth comes at the expense of high inflation rate and widening current account deficit7 (CAD), which have been the chronic8 problem for the Turkish economy.
"The yearly inflation has been estimated at 7.3 percent. It is higher than the central bank's target of 5 percent. This gap is the main constraint9 on monetary10 policy," said Seyfettin Gursel, another leading Turkish economist.
Moreover, the CAD is expected to grow to over 58 billion U.S. dollars this year, from 47 billion dollars in 2012.
According to Gursel, while the growth was almost fully11 led by net exports last year, it is expected to ride on domestic demand in 2013, which will lead to higher CAD.
Turkey's Economy Minister Zafer Caglayan welcomed the central bank's move, saying that it was late but encouraging. "We have long waited for this proactive move to come. If only the bank had taken measures before we saw unemployment jump and growth slow last year."
Following the rate slash4, the central bank signaled in a written statement that "Ongoing12 uncertainties13 regarding the global economy and the volatility14 in capital flows require the monetary policy to remain flexible in both directions."
Economist Yasar Edinc pointed15 out that the bank does not see the higher inflation as a serious risk at this time considering that the prices of commodities and energy have been on declining curve.
"This may change however if the central bank sees a risk in the second quarter and allows appreciation16 of lira," Edinc said.
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1 analysts | |
分析家,化验员( analyst的名词复数 ) | |
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2 stimulate | |
vt.刺激,使兴奋;激励,使…振奋 | |
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3 stimulus | |
n.刺激,刺激物,促进因素,引起兴奋的事物 | |
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4 slash | |
vi.大幅度削减;vt.猛砍,尖锐抨击,大幅减少;n.猛砍,斜线,长切口,衣衩 | |
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5 slashing | |
adj.尖锐的;苛刻的;鲜明的;乱砍的v.挥砍( slash的现在分词 );鞭打;割破;削减 | |
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6 economist | |
n.经济学家,经济专家,节俭的人 | |
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7 deficit | |
n.亏空,亏损;赤字,逆差 | |
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8 chronic | |
adj.(疾病)长期未愈的,慢性的;极坏的 | |
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9 constraint | |
n.(on)约束,限制;限制(或约束)性的事物 | |
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10 monetary | |
adj.货币的,钱的;通货的;金融的;财政的 | |
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11 fully | |
adv.完全地,全部地,彻底地;充分地 | |
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12 ongoing | |
adj.进行中的,前进的 | |
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13 uncertainties | |
无把握( uncertainty的名词复数 ); 不确定; 变化不定; 无把握、不确定的事物 | |
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14 volatility | |
n.挥发性,挥发度,轻快,(性格)反复无常 | |
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15 pointed | |
adj.尖的,直截了当的 | |
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16 appreciation | |
n.评价;欣赏;感谢;领会,理解;价格上涨 | |
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