Turkey’s central bank raised interest rates to 25 percent from 17.5 percent on Thursday, a big jump that underscored a shift by the country’s president, Recep Tayyip Erdogan, toward a more orthodox monetary policy to control inflation that exceeded an annual rate of 80 percent last year.
The size of the increase, which put the benchmark rate at its highest level since 2004, was bigger than expected, exceeding forecasts from financial analysts, who had predicted a more modest jump after July’s 2.5 percent rise.
After the announcement, the Turkish lira quickly rallied, briefly rising more than 7 percent against the U.S. dollar.
It was trading at 25.6 per dollar by early evening in Turkey.
In a statement, the Turkish central bank said it had “decided to continue the monetary tightening process in order to establish the disinflation course as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behavior.”
Persons:
Recep Tayyip Erdogan, “
Organizations:
U.S .
Locations:
Turkish, Turkey