The Turkish Central Bank is following a similar policy to those in Europe and the US as it tries to minimise the effects of the global economic recession that are accelerating in Turkey.

Yesterday it cut interest rates by 1 percent bringing the rate for savers down from 11.5 percent to a record low of 10.5 percent.

Mixed News for Savers

The central bank has reduced interest rates by a total of 6.25 percent since September 2008 in consecutive cuts.

Luckily for savers the rate of inflation has eased to 7.7% meaning savers will just scrape a real rate of return of 1.2% after tax and inflation are taken into account.

However, for all those people “living off the interest” times are now getting tougher.

In September last year it took 126,000 TL to raise 1,500 TL per month interest. Now it takes 202,000 TL.

Or to put it another way the 107,000 TL now only makes on 795 TL per month after tax – a 47% reduction in income.

Lira Weakens

The British Pound rose against the Turkish Lira after the news to 2.48 TL to the GBP. Earlier in the day it stood at around 2.39 TL.