Shock And Awe From Turkey Which Hikes Overnight Rate By 4.25% To 12%, Blows Away Expectations

The much anticipated Turkey Central Bank Decision is out and it is a stunner:

TURKEY’S CENTRAL BANK RAISES OVERNIGHT LENDING RATE TO 12.00% – this is the key rate, and it was at 7.75% until now, so an epic 4.25% increase, far greater than the 2.50% expected.
TURKEY’S CENTRAL BANK RAISES BENCHMARK REPO RATE TO 10.00% – from 4.50%
TURKEY’S CENTRAL BANK RAISES OVERNIGHT BORROWING RATE TO 8.00% from 3.50%
TURKEY CENTRAL BANK SETS PRIMARY DEALER RATE AT 11.5% VS 6.75%
TURKEY CENTRAL BANK RAISES LATE LIQUIDITY WINDOW RATE TO 15%

This is what a shock and awe move is. And it better work.

Some other notes:

Turkey will fund via one week repo rate in period ahead instead of marginal funding rate;
Turkey decided to implement strong tightening for price stability, to simply operational framework;
Will maintain tight monetary policy until clear improvement in inflation outlook
Sees inflation at 5% in mid 2015 due to this stance.

For now the TRY (as well as the USDJPY and thus, equity futures) is loving the move, plunging 500 pips against the dollar.