Money changer counts Turkish lira bills at a currency exchange office in Istanbul January 24, 2014. REUTERS/Murad Sezer
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Turkey raised interest rates for the first time in nearly three years Thursday, hiking its benchmark rate by a more-than-expected 50 basis points as concerns about a tumbling lira eclipsed President Recep Tayyip Erdogan's calls for cheap credit.Erdogan, who has described himself as an "enemy" of interest rates and chastised banks for what he says is the high cost of credit, wants the central bank to lower rates to spur growth. The bank raised the benchmark one-week repo rate to 8 percent from 7.5 percent, bigger than the 25 basis point hike forecast by 12 out of 19 economists polled by Reuters.In another unexpected move, it increased the overnight lending rate – the highest of the multiple rates it uses to set policy – to 8.5 percent from 8.25 percent.
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