ANKARA, Turkey — Turkey’s Central Bank stunned the markets Thursday, raising interest rates by 6.25% — the highest hike since Recep Tayyip Erdogan became prime minister in 2003. The move strengthened the lira, which has lost 40% of its value this year, and defied Erdogan, who had expressed his aversion to an interest rate increase only hours earlier.
Analysts praised the increase as a long overdue correction for an economy where inflation rose to 18% last month. On Aug. 13, the lira fell to as low as 7.24 against the dollar. In August 2017, the lira stood at 3.5 to the dollar.