Turkey's central bank Wednesday morning raised all of its main interest rates in dramatic fashion after an emergency policy meeting to defend a crumbling lira.
The bank raised its overnight lending rate to 12 percent from 7. 75 percent, its one-week repo rate to 10 percent from 4.5, and its overnight borrowing rate to 8 percent from 3.5, much sharper moves than economists had forecast.
In a statement, the bank said it would maintain tight monetary policy until the inflation outlook showed a clear improvement.
Earlier on Tuesday, the central bank revised its inflation forecast for 2014 to 6.6 percent from 5.3 percent.
The central bank had been struggling to contain the lira's precipitous slide, with investor confidence damaged by a corruption scandal shaking the government and the global impact of a cut in US monetary stimulus since the end of last year.
Analysts said the cutting was a bold measure to restore confidence and also limited spillover effects in other markets.