Turkey raises interest rate to 17.5pc

Turkey's central bank on Thursday hiked its key interest rate by 250 basis points to 17.5 per cent, as the country's monetary policymakers embark on a long and painful mission to tackle double-digit inflation, reports CNBC.

"Monetary tightening will be further strengthened as much as needed in a timely and gradual manner until a significant improvement in the inflation outlook is achieved," the bank said in a statement, after its interest rate decision.

The Turkish lira fell about half a percentage point against the dollar on the news, trading at 26.92 to the greenback. Earlier this week, the lira hit a fresh record low of 26.9 against the dollar over market concerns that the coming rate rise would be less than expected. The currency has lost 30 per cent of its value against the dollar this year.

In June, Turkey lifted its interest rate for the first time in more than two years, after Turkish President Recep Tayyip Erdogan appointed policymakers who had vowed to implement economic orthodoxy to turn around the inflation picture.

Turkey steadily lowered its policy rate from 19 per cent in late 2021 to 8.5 per cent last March, as inflation ballooned, breaching 80 per cent in late 2022 and easing to just under 40 per cent in June.