The decision, announced by the bank's Monetary Policy Committee, aims to combat surging inflation and stabilize the Turkish economy.

In its official statement, the bank highlighted its commitment to establish a disinflation course promptly, anchor inflation expectations, and address pricing behavior concerns. The increase in the policy rate (the one-week repo auction rate) from 15% to 17.5% represents a continuation of the bank's efforts to counter inflationary pressures and economic challenges.

Following the news, the Turkish lira experienced a slight dip against the dollar, declining approximately half a percentage point to 26.92 against the greenback. The currency has witnessed a 30% depreciation against the dollar throughout the year, further emphasizing the urgency of the monetary tightening measures.

Earlier this week, the lira had touched a new record low of 26.9 against the dollar, amid concerns that the anticipated rate hike might fall short of market expectations.

This recent rate hike follows Türkiye's first interest rate increase in over two years, implemented in June, after President Recep Tayyip Erdogan appointed policymakers who pledged to adopt economic orthodoxy to combat inflationary pressures.

According to analysts, the Turkish central bank's decisive move is intended to address economic challenges and restore stability to the nation's financial landscape, as the country grapples with soaring inflation and currency depreciation. (ILKHA)