Turkey central bank cuts key interest rate to 36%

ISTANBUL, Oct 22 (Reuters) - Turkey's central bank lowered its key interest rate by 100 basis points to 36% on Thursday, in line with expectations, having left it unchanged at the previous five meetings as it monitored the inflation impact of the Iran war.

In a Reuters poll, 22 economists forecast a rate cut and only two predicted no change to borrowing costs. Economists also expect another 100 bp rate cut from the central bank in its December meeting bringing the year end policy rate to 35%. TRINT=ECI

Since the Iran war started at the end of February, Turkey's central bank has kept policy rate at 37%. The central bank has taken other liquidity steps that pushed the lira overnight rate up to the 40% limit until August to limit the war impact on economy.

Last month, Turkey's investment fund sector was hit by a crisis after regulators ordered the liquidation of 131 funds, which had reached more than $20 billion in assets over just three years.

Authorities began taking measures on September 17 after turmoil in the fund market, with the central bank increasing repo funding and raising banks' borrowing limits tenfold to support liquidity.

Central Bank Governor Fatih Karahan said earlier this month that data showed there was no risk of contagion from the crisis, but the bank would intervene again if necessary.