The Monetary Policy Committee, under Governor Hafize Gaye Erkan, raised the rate to 25% from 17.5% and far above survey expectations. Most economists polled by Bloomberg predicted a hike to 20%.
The MPC said in a statement it “decided to continue the monetary tightening process in order to establish the disinflation course as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behavior. It was the MPC’s first decision since three new deputy governors were appointed late last month. They included a former adviser to the Federal Reserve Bank of New York and the ex-chief economist at one of Turkey’s biggest private lenders.Erkan, appointed in June, has begun to end Turkey’s era of ultra-low borrowing costs previously favored by Erdogan.