FOLLOWING three consecutive cuts to its policy rate, Turkey’s Central Bank kept this rate unchanged on Wednesday but cut its overnight lending rate by 75 basis points, a decision that was followed by gains in local currency.

The bank cut the lending rate to 11.25 percent from 12 percent, and also cut its overnight borrowing rate for primary dealers to 10.75 percent, a surprise move despite stubborn inflation.

Following the news, the lira enjoyed the biggest gain against the greenback worldwide.

Wednesday’s rate decision was the first since Prime Minister Recep Tayyip Erdoğan was elected president.

Benchmark index Borsa İstanbul (BIST) hovered around 80,000, mostly unchanged from Tuesday’s closing. The two-year benchmark yield dropped by 0.33 percent to 9.04 percent on Wednesday.

The Central Bank of Turkey left other key rates, including its main 8.25 percent weekly repo rate, on hold.

Earlier this month, the central bank said the inflation forecasts from its monthly survey had risen to 8.7 percent at the end of the year from the previous forecast of 8.3 percent, despite its aggressive rate hike in January. The majority of economists polled by Reuters say high inflation undermines the case for rate cuts.

But Erdoğan, wedded to the idea that high rates in fact cause inflation, has repeatedly urged the central bank to make bigger rate cuts, after an emerging market sell-off in January forced it to almost double rates at a midnight meeting.

“The market was not expecting any change. A cut to the upper band can be perceived as a move to please the economy management,” Istanbul-based Global Securities said in a note to clients after the decision was announced.

Erdogan was elected president this month in the first direct vote for the position, reassuring markets that there would be no big changes in the management of the economy, but raising concern about continued pressure on the central bank.