Türkiye's central bank held an emergency session on Wednesday, lifting its overnight borrowing rate by 175 basis points to 15 percent, a move that exceeded market forecasts of a 100-basis-point rise and marked the first rate increase in nearly five years.
The decision came after annual inflation climbed to 9.86 percent in May, surpassing expectations for the second consecutive month and threatening the government's year-end inflation goal of 5 percent. The lira and the Istanbul stock exchange's main index had each shed roughly 14 percent since May, hit by domestic price pressures and broader emerging-market capital outflows.
Analysts welcomed the move as a signal of the bank's resolve, though several cautioned that the government would still struggle to meet its 5-percent target. Fortis Bank research head Haluk Burumcekci projected end-year inflation near 8.5 percent.
The rate decision was also the first major test for central bank governor Durmus Yilmaz, who took office in April. The bank had cut its borrowing rate 27 times since early 2002, reducing it from 57 percent to 13.25 percent before Wednesday's reversal.
Prime Minister Recep Tayyip Erdogan, facing elections the following year, reaffirmed his commitment to fiscal discipline and Türkiye's EU membership bid. Economy Minister Ali Babacan ruled out any revision to the inflation target, saying market trends needed more time to assess.
Historical summary. TurkishPress restated this wire report, first published in June 2006, in its own words.