The Central Bank of Turkey has increased its one-week repo rate by 7.5% – to 25%.

The current central bank governor, Hafize Gaye Erkhan, was appointed in June. This followed President Erdogan’s reelection in May.

Since her appointment in June, Governor Erkhan has increased Turkey’s policy rate from 8.5% to 25%. Turkey’s July inflation was 48%.

If this aggressive policy shift continues, inflation may abate and the long run prospects for the economy improve. This could present an opportunity to investors in higher quality Turkish credits that are able to withstand very high short term rates.