Turkey`s central bank cut its key overnight borrowing and lending rates on Wednesday in expectation of a faster decline in inflation than previously thought.

The bank`s monetary policy board said in a statement that it had trimmed the borrowing rate by 50 basis points to 16.25 percent and the lending rate by 100 basis points to 18.75 percent.

It said the slowdown in the economy and sharp declines in oil and commodity prices would push down inflation faster than previously forecast.

Meanwhile, exchange rate fluctuations would have a limited impact on prices as the global financial crisis would restrain demand.

Last month, the central bank had raised its forecast for year-end inflation to 11.1 percent, a full 7.1 percentage points higher than the previous target of 4.0 percent. Annual inflation was running at 12 percent in October.

Along with other emerging market nations, Turkey has seen its currency fall against the US dollar, forcing the bank to introduce a series of measures to halt the slide and ensure liquidity as the financial crisis roils markets.