In surprise move, Türkiye hikes policy rate 500 basis points

In a surprise move, the Turkish Central Bank on Thursday hiked its policy rate, also known as the one-week repo rate, by 500 basis points to 50% "in response to the deterioration in the inflation outlook."

The bank also decided to adjust its monetary policy operational framework by setting the Central Bank overnight borrowing and lending rates 300 basis points below and above the one-week repo auction rate, respectively.

"Tight monetary stance will be maintained until a significant and sustained decline in the underlying trend of monthly inflation is observed, and inflation expectations converge to the projected forecast range. Monetary policy stance will be tightened in case a significant and persistent deterioration in inflation is foreseen," it said.

Türkiye's annual inflation surged to 67.07% in February from 64.86% in the prior month, according to the country's statistical authority.

The bank has projected 36% inflation at the end of this year and 14% for next year.