Turkey raises its one-week repo auction rate to 17 percent

Shafaq News/ Turkey's central bank raised its policy interest rate for the third time this year, and for the second time under its new governor, in what it said was a "strong monetary tightening" to eliminate the risks to the outlook for inflation and reiterated it would "decisively" maintain tight monetary policy until there is a permanent fall in inflation.

The Central Bank of the Republic of Turkey (CBRT) raised its one-week repo auction rate to 17 percent and has now raised it by 825 points following a first hike in September and then a second hike in November.

Despite the rate hikes, Turkey's inflation rate has continued to accelerate and it jumped to 14.03 percent in November from 11.89 percent in October, almost three times the central bank's medium-term target of 5.0 percent.

But the rate hike was welcomed by the foreign exchange market with the lira continuing its recent rise to around 7.5 to the U.S. dollar.

The continued rise in the lira indicates that financial markets are still voicing confidence in the change in the direction of Turkey's economic policy following the change in finance minister and governor in November toward a more orthodox policy.