Turkey’s currency dropped toward record lows, its bonds sold off, and investors moved to price in a higher risk of sovereign default, after the country’s central bank unexpectedly cut interest rates.

The cut in Turkey’s benchmark interest rate, to 13% from 14%, came as a surprise to analysts who expected it would be held steady as Turkey deals with high inflation and economic implications of the Ukraine war. Turkish President Recep Tayyip Erdogan believes—contrary to economic orthodoxy—that cutting interest rates tames inflation, and has called for lower rates in recent months.

The action runs counter to decisions by other central banks around the world, which are raising interest rates in order to contain rampant inflation driven by high energy prices, the Russian attack on Ukraine, supply-chain issues and postpandemic economic growth.