The Turkish central bank raised interest rates to 25% on Thursday, more than anticipated, signaling its commitment to quell inflation through monetary policy. The main interest rate was previously at 17.5%. Economists surveyed by Reuters had expected an increase to 20%.

In the battle against economic challenges, the Turkish lira strengthened against the euro and US dollar following this announcement.

In a Thursday statement, the Turkish central bank committee stated that it “decided to continue the process of monetary tightening in order to establish the disinflation path as soon as possible, to anchor inflation expectations, and to discipline the deterioration in the pricing behavior.”

Persistently high inflation rates recently led the central bank to revise its year-end inflation forecast from 22.3% to 58%.

The bank stated on Thursday that it expects inflation to reach the “upper band of the forecast range” by year-end.

In June, Turkish President Recep Tayyip Erdogan appointed former Wall Street banker Hafize Gaye Erkan as the new governor of the central bank, indicating a departure from the controversial policy of interest rate cuts in the country as inflation rose.

Since then, the central bank has announced two interest rate hikes, although July’s move fell short of market expectations.

Source: CNBC.com