Turkey's central bank decided on Thursday to raise its key interest rate by an aggressive 7.5 percentage points, in an attempt to confront inflation with monetary tightening.

Turkey's inflation in July was about 47 percent compared to a year earlier.

Runaway inflation prompted the decision to raise the key rate from 17.5 percent to 25 percent.

The hike was larger than expected and strengthened the Turkish lira, which had been weak against the US dollar.
The lira surged against the dollar by about 5 percent at one stage on Thursday.

The central bank had been following the rate-cutting course set by President Recep Tayyip Erdogan. But after he was re-elected in May, his administration shifted to monetary tightening.

The bank has raised the key rate three times since June, explaining that inflation has been worse than expected.