Turkey’s central bank decided to raise interest rate by a whopping 500 basis points on its benchmark one-week repo rate to 40%, a much larger increase than an expectation for a 250bps hike.
The decision came as the central bank continued to fight high inflation and falling lira. The country recorded an inflation rate at 61% in October, while its lira currency was trading at 28.766 to the dollar, slightly stronger after the hike.
Lira was performing poorly this year, depreciating from high teens in January to now nearly 29 to one US dollar. It is now down 35% against the greenback this year and has lost more than 80% of its value against the dollar over the last five years.
