ISTANBUL, June 22 Reuters Turkey39;s central bank hiked its key interest rate by 650 basis points to 15 on Thursday in a reversal of President Tayyip Erdogan39;s lowrates policy, although the postelection tightening fell short of expectations.

In its first meeting under new Governor Hafize Gaye Erkan, the bank changed course after years of loose policy in which the oneweek repo rate had dropped to 8.5 from 19 in 2021 despite soaring inflation.

Monetary tightening will be further strengthened as much as needed in a timely and gradual manner until a significant improvement in the inflation outlook is achieved, the bank39;s policy committee said after delivering its first hike since early 2021.

It raised rates in order to establish the disinflation course as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behavior, it added, striking a more hawkish tone compared to its statements under former governor Sahap Kavcioglu.

The strong tightening remained below expectations, given the median estimate of a hike to 21 in a Reuters poll. Most economists expect further rate hikes this year, with the yearend forecast median at 30.

While all 18 economists in the poll had predicted the hike, the forecasts ranged widely given little guidance from the bank.

Highlighting the discord between market expectations and monetary policy, the central bank39;s key rate remains below deposit rates that reach up to 40. Annual inflation was just…