ISTANBUL, Feb 23 (Reuters) - Turkey's central bank lowered its policy rate by 50 basis points to 8.5% on Thursday, as expected, following a devastating earthquake that killed more than 43,000 people in southern Turkey this month. It said after its monthly monetary policy committee meeting that it will closely monitor earthquake driven supply-demand imbalances on inflation and stressed the importance of supporting economic growth and employment. Last year the bank cut its key rate by 500 basis points in an unorthodox easing cycle designed to counter an economic slowdown, before keeping it steady at 9% in December and January. In a Reuters poll of 17 economists, the median forecast was for a 50-basis-point cut to minimise the economic impact of the earthquake. Nine economists expected a cut in the policy rate of up to 200 basis points, while eight institutions expected the rate to be kept steady.

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