Gains made by the embattled Turkish lira (TRY) in the wake of the central bank’s April 25 hiking of its top interest rate by 75 basis points (bp)—the market consensus forecast was for 50 bp—evaporated as the lira bears stomped back into the picture.

After the greater-than-anticipated hike was announced, the TRY strengthened by 1.3%, but by near 18:00 Istanbul time it was 0.3% weaker on the day, standing at 4.0966 to the dollar. However, by around 13:00 on April 26, the TRY had pulled back to 4.0648.

Turkey is facing sticky double-digit inflation, mounting corporate debt worries and a surging current account deficit, thus the fact that there had been some tightening, seen as long overdue, was welcomed by analysts. But plenty of observers said 75 bp was short of what was needed given fears that economic imbalances amid ‘warp-speed’ growth could overheat the economy and send it off the rails.

Guillaume Tresca, a strategist at Credit Agricole, was quoted by Bloomberg as saying: “It’s not enough, in a normal environment they should have done 150-200 basis points. The central bank communiqué is a disappointment too. The rhetoric is not more hawkish. There is nothing on the liquidity front. It is almost a carbon copy of the previous one. They just added ‘upside movements in import prices have increased such risks,’ in other words it means the recent FX depreciation.”

He added: “Market and economists want more, all the more since inflation will re-accelerate very soon. If the CBRT were a normal central bank, they would have hiked by 150-200 basis points. In other words, they are still standing behind the curve”

However, Kiran Kowshik, an emerging-market foreign-exchange strategist at UniCredit, told the news agency: “In terms of language, the CBRT says with a 75 basis-point hike they decided to ‘implement a measured tightening’. Back in January 2017, when they hiked by 100 basis points, they had said that they decided to ‘strengthen the monetary tightening’. I would interpret this contrasting language between both moves as suggesting that, this time around, they remain open to doing more if the TRY continues to weaken. So they see a 75 basis points as a measured move.”