- Turkey's central bank raised its key interest rate by 250 basis points to 17.5%, falling short of analysts' expectations of a 500 basis points increase. The move comes as the country's monetary policymakers aim to tackle double-digit inflation, which had reached nearly 40% in June.
- In response to the interest rate hike news, the Turkish lira depreciated by about half a percentage point against the US dollar, trading at 26.92 to the greenback. The currency has already experienced a significant decline this year, losing 30% of its value against the dollar.
Why it matters
This highlights the challenges between traditional economic orthodoxy, which suggests raising rates to control inflation, and President Recep Tayyip Erdogan's stance of lowering rates.