The Turkish Central Bank on Thursday announced an interest rate hike of two percentage points, above market expectations.

The bank’s policy rate – also known as the one-week repo rate – rose to 17%, up from 15%, the bank said in a statement.

The median forecast by 21 economists surveyed by Anadolu Agency last Friday was a rise in the one-week repo rate of 150 base points, i.e. 1.5 percentage points.

Following the move, the Turkish liras appreciated nearly 1% against the US dollar.

In its last meeting on Nov. 19, the Central Bank increased its one-week repo rate from 10.25% to 15% while taking steps to simplify the operational framework of monetary policy.

Speaking on Monday, Naci Agbal, the bank’s governor, said the risk of upward inflation will require a tight and decisive monetary policy stance in 2021, adding that it will be tightened if needed.

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