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Turkey yields to markets, raises interest rates as lira tanks

The central bank hikes its benchmark rate for the first time since 2018, hoping to curb double-digit inflation and a currency that is plumbing record lows.
Governor of Central Bank of the Republic of Turkey (CBRT), Murat Uysal presents the Inflation Report during a press conference, in Ankara, on July 31, 2019. (Photo by Adem ALTAN / AFP)        (Photo credit should read ADEM ALTAN/AFP via Getty Images)

ISTANBUL — Turkey’s central bank surprised financial markets on Thursday with its first interest rate hike in almost two years in a bid to rescue the spiraling lira currency and rein in inflation, defying President Recep Tayyip Erdogan, an outspoken critic of higher rates.

Policy-makers lifted the benchmark one-week repo rate by two percentage points to 10.25% after the lira hit yet another record low against the dollar earlier in the day. The currency has lost a fifth of its value this year amid fears that Erdogan’s quest for growth at all costs could unleash economic havoc.

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