Turkey interest rate raised for third time in under 2 months

The Turkish Central Bank has increased its key interest rate from 16.5 percent to 17.75 percent, its third increase in under two months.

The hikes attempt to temper a surge in inflation. Turkish consumer prices increased to 12.15 percent year-on-year in May, marking the highest inflation rate for six months.

The Turkish Central Bank said Thursday that "elevated levels of inflation and inflation expectations continue to pose risks on the pricing behavior." Rate hikes bring can down inflation but can also weaken growth.

The increases suggest President Recep Tayyip Erdogan is easing his grip on the central bank. Claus Vistesen, an analyst at Pantheon Macroeconomics, says that "two weeks ago, the impression was that Erdogan would step in. Politicians don't want to slow the economy because of upcoming elections."