The Central Bank of the Republic of Turkey (CBRT) announced on Thursday that it raised its policy (one-week repo) rate by 200 basis points to 10.25%.
In its policy statement, the CBRT noted that it looks to restore the disinflation process and support price stability with the decision to hike the policy rate.
"Demand-driven disinflationary effects were expected to become more prevalent," the CBRT said in its policy statement and acknowledged that inflation followed a higher-than-envisaged path. "Tightening steps taken since August should be reinforced in order to contain inflation expectations," the CBRT added.
With the initial market reaction, the USD/TRY pair fell sharply and was last seen losing 1.5% on the day at 7.5730.
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