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Turkey's Central Bank defies Erdogan, hikes interest rates

Despite Turkish President Recep Tayyip Erdogan's vehement opposition to raising interest rates, the country's Central Bank took the move today that economists say is long overdue to address alarming inflation.
A picture taken on August 14, 2018 shows the logo of Turkey's Central Bank (TCMB) at the entrance of the bank's headquarters in Ankara, Turkey. (Photo by ADEM ALTAN / AFP)        (Photo credit should read ADEM ALTAN/AFP/Getty Images)

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.

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