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CAIRO: Turkey’s central bank shocked markets on Thursday by cutting its main interest rate by 100 basis points to 13 percent, saying it needed to keep driving economic growth despite inflation hitting nearly 80 percent and a monetary tightening trend among its peers worldwide.
The lira dropped more than 1 percent as the bank took its latest step down the unorthodox policy path advocated by President Recep Tayyip Erdogan that aims to provide targeted cheap credit to help boost Turkish exports.
There had been virtually no signal that another rate cut was in the works and no economist polled by Reuters had predicted one, given that inflation has soared to 24-year highs, eating deeply into Turks’ earnings and savings.
US weekly jobless claims dip
The number of Americans filing new claims for unemployment benefits fell last week and data for the prior period was revised sharply down, suggesting labor market conditions remain tight, though higher interest rates are slowing momentum.
The weekly unemployment claims report from the Labor Department on Thursday added to strong industrial production in July and underlying retail sales growth in allaying fears that the economy was in recession. The claims report, the most timely data on the economy’s health, could give the Federal Reserve ammunition to deliver another hefty rate hike next month.
“Fears of broad-based layoffs have yet to materialize,” said Mahir Rasheed, a US economist at Oxford Economics in New York. “Still, we doubt claims will accelerate sharply as labor demand remains well ahead of labor supply, while the outlook for the economy remains relatively positive despite elevated uncertainty regarding inflation and growth.”
Chile’s economy grows
Chile’s economy expanded 5.4 percent in the second quarter of 2022 from a year earlier, central bank data showed on Thursday, below expectations of a 5.7 percent increase from economists polled by Reuters.
The gross domestic product showed no growth from the previous three months in seasonally adjusted terms. Economists were expecting a 0.3 percent rise.
Spain’s trade deficit widens
Spain’s trade deficit in the first six months of the year widened almost six-fold from the same period a year earlier to €32 billion ($32.6 billion), the Industry Ministry said on Thursday.
The outcome was wider than the deficit for the whole of 2021 and compared with a €5.4 billion deficit in the first six months a year ago, the ministry said in its monthly report.
Excluding energy imports and exports, the trade deficit in the period was €6.1 billion, the ministry said.
(With input from Reuters)