Adds quote, lira move, background
ISTANBUL, June 17 (Reuters) - Turkey's central bank said on Monday it will extend a liquidity facility to primary-dealer banks with an interest rate set at 23%, below its 24% policy rate, a move economists called a backdoor policy easing.
The facility would be limited in part by domestic government debt purchased by the banks through Treasury auctions, it said.
The move appeared to hint at a reversal after a series of unorthodox efforts by the central bank and state banks in the face of a renewed lira selloff since March. Last year, Turkey's economy tipped into recession after a full-blown currency crisis.
The central bank said the infusion would contribute to "the deepening of financial markets and the effectiveness of monetary policy."
Last week, the central bank left its policy rate on hold and in a statement highlighted the improvement in inflation. According to a Reuters poll, economists predict a formal policy easing as soon as July.
"It seems to be easing by the backdoor," Guillaume Tresca, Senior EM Strategist at Credit Agricole, said on Twitter after the move. "It is not a full rate cut but it looks like a rate cut. Again, it is not good in terms of credibility in Turkey."
The lira stood at 5.8795 against the dollar at 1023 GMT, slightly firmer than Friday's close of 5.8910. The lira did not substantially move after the liquidity step.
The facility will be used through overnight repo transactions, and will have a limited share within the overall central bank funding, the central bank said.
(Reporting by Ezgi Erkoyun; Editing by Jonathan Spicer)