Turkey's central bank lifted its key interest rates sharply at an emergency midnight policy meeting to combat the weakness in the lira.
The one-week repo rate was increased sharply to 10 percent from 4.5 percent. The central bank raised its overnight lending rate to 12 percent from 7.75 percent and the overnight borrowing rate to 8 percent from 3.5 percent.
The Monetary Policy Committee decided to simplify the operational framework. Accordingly, liquidity will be provided primarily from one-week repo rate instead of the marginal funding rate in the forthcoming period.
The Turkish lira is one among the most volatile currency in the emerging market. The latest central bank move has helped to pause the decline in lira.
A large current account deficit and external debt burden, coupled with limited FX reserve coverage, means that Turkey remains among the most vulnerable emerging markets, Neil Shearing, chief emerging markets economist at Capital Economics said.
Governor Erdem Basci said it will implement necessary measures to contain the negative impact on inflation and macroeconomic stability.
Prime Minister Tayyip Erdogan has been resisting interest rate hikes in a bid to support growth ahead of elections.
Unless the government follows the central bank's lead, by both tightening fiscal policy and toning down some of its more aggressive rhetoric, Turkey will remain vulnerable to further bouts of market turbulence, Shearing at Capital Economics added.
The central bank expects inflation to reach the 5 percent target by mid-2015. It vowed to maintain tight monetary policy stance until there is a significant improvement in the inflation outlook.
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April 24, 2026 15:15 ET Economics news flow was relatively light this week even as the conflict in the Middle East continued, raising concerns for policymakers. In the U.S., spending data, initial jobless claims and pending home sales were the highlights. Business confidence in the biggest euro area economy was in focus in Europe. Inflation data from Japan gained attention in Asia.