Turkey’s central bank raised interest rates by 500 basis points to 40%

Turkey’s central bank on Thursday raised its key interest rate, the benchmark one-week repo rate, by another 500 basis points to 40%.

That was double the expectations of economists who had predicted a 250-basis-point hike.

The move was seen as a continuation of the bank’s efforts to combat high inflation and a falling Turkish currency, the lira. The country’s inflation rose to 61 percent in October.

The lira traded at 28.766 to the dollar following the news, slightly stronger against the greenback.

Timothy Ash, emerging market strategist at BluePay Asset Management, was one of the few experts who expected a 500-basis point rise.

“A very impressive move by CPRD [Central Bank of the Republic of Turkey] — exploring their legacy and exceeding expectations,” he said in a note.

“These boys and girls are serious about fighting inflation,” he added. “We have to give them credit for that.”

The central bank’s decision follows a series of interest rate hikes that have hurt Turks as the country aims to reverse years of soaring inflation and a dramatically weakened currency — in large part the result of the Ankara government’s stubbornly loose monetary policy. .

The lira is down 35% year-to-date against the dollar and has lost more than 80% of its value against the greenback over the past five years.

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