Turkey hikes interest rates by 750 basis points

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The Central Bank has raised the policy rate for the third time in a row, this time by 750 basis points to 25%.

"The policy rate will be determined in a way that will create monetary and financial conditions that will reduce the main trend of inflation and bring inflation to the medium-term target of 5 percent," the Monetary Policy Committee of the bank said in a statement. "Monetary tightening will be gradually strengthened as and when needed until a significant improvement is achieved in the inflation outlook."

Following the decision, Treasury and Finance Minister Mehmet Şimşek said on social media, "We are determined! Price stability is our top priority."

The lira gained value after the hike. The dollar exchange rate, which was at 27.27 lira levels before the decision, lost nearly 1 lira in value after the decision and dropped to 26.25.

Turkey had raised interest rates for the first time in 27 months in June, after the replacement of the finance minister and Central Bank governor following the elections in May. The interest rate was increased by 650 basis points in June and by 250 basis points last month. (VC/VK)