Last night's decision from the Central Bank of Turkey managed to catch everyone off guard.
An emergency meeting saw the overnight lending rate hiked from 7.75 per cent to 12 per cent, and the one week repo rate up from 4.5 per cent to 10 per cent.
The central bank's hand was forced into announcing a meeting on 27 January, after the lira had fallen for 11 straight days against the dollar.
Kit Juckes of Societe Generale says that "rate hikes of this magnitude cannot be maintained for longer than a few months before the negative domestic economic effects offset any benefits from boosting credibility and restoring confidence, but for now, market nerves are calmed."
Governor Erdem Basci's (pictured) move appears to have paid off, as the lira climbed by nearly nine per cent against the dollar on the announcement.
Turkey is one of a group of countries dubbed the "Fragile Five" - a cohort that also includes Indonesia, South Africa, Brazil, and India - which are considered to be particularly vulnerable to a phase of monetary normalisation.
The Reserve Bank of India also elected to hike rates yesterday, as the country's benchmark rate was increased from 7.75 per cent to eight per cent.
As the US' Federal Reserve and other key central banks start to unwind from supportive monetary policy positions, Juckes says that "from India to the US, we are now in a global monetary policy tightening cycle".
South Africa has a central bank decision later today, at 13.00pm GMT. While the central bank isn't widely expected to hike, Turkey's move does put some pressure on policy makers.
And finally, I would like to wish all the best to the South African Reserve Bank now that its repo rate is HALF of Turkey's.— barnejek (@barnejek) January 29, 2014