The Turkish Central Bank on Thursday announced an interest rate hike of one percentage point above market expectations.

The bank’s policy rate – also known as the one-week repo rate – was raised 200 basis points to 19%, up from 17%.

“Considering the upside risks to inflation expectations, pricing behavior, and the medium-term inflation outlook associated with these developments, the MPC [Monetary Policy Committee] has decided to implement a front-loaded and strong additional monetary tightening,” the bank said in a statement.

Taking into account the end-2021 forecast target, a tight monetary policy will be maintained until strong indicators point to a permanent fall in inflation and price stability, the bank added.

Following the move, the Turkish lira appreciated nearly 2% against the US dollar — to 7.3280 from 7.4760.

The median forecast by 24 economists surveyed by Anadolu Agency last Friday was a rise in the one-week repo rate of 100 base points, i.e. 1 percentage point.

Last month, Turkey saw a 15.61% annual hike in consumer prices, according to the country’s statistical authority.

The Turkish Central Bank has set a medium-term inflation target of 5%.

According to its schedule, the bank will hold twelve MPC meetings this year.

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