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Turkey's central bank asserts independence

Turkey's central bank governor Murat Çetinkaya
Turkey's central bank governor Murat Çetinkaya

Commenting on the decision by Turkey's central bank to raise the interest rate, Neil Wilson, chief market analyst at Markets.com, says: "This was a hike beyond what the market was thinking and in the context of the earlier comments from president Erdogan, is being treated warmly by markets.

"It represents a major and important reassertion of the central bank’s independence and shows they will not be bullied by politicians, although to a large degree its hand was forced by the 18% print on August inflation."

He says: "There was also a commitment to do more if necessary and that will be regarded as a sign that policymakers are serious, although it’s maybe a tad short of being a ‘whatever it takes’ type commitment – indeed the move on the lira only takes it back to where it was at the end of August."

Turkey's bank defies Erdoğan to raise rates

President Recep Tayyip Erdoğan

Turkey's central bank has defied calls from President Recep Tayyip Erdoğan and voted to raise interest rates to 24% from 17.75%.

Earlier today President Erdoğan said the central bank should cut the rate, saying that high interest rates cause inflation.

However, the bank lifted the one week repo rate above forecast between 21% and 22%.

The lira jumped against the dollar after heading lower earlier on President Erdoğan's calls for a cut.