Official data from Turkey showed Monday that the country's year-on-year inflation rate stood at 17.9 percent in August.

Inflation is now at its highest level since September 2003, the year Recep Tayyip Erdogan first took power as prime minister.

Ratings agencies and analysts had long called on the central bank to raise interest rates, but in July the lender kept them at 17.75 percent despite all warnings.

While central banks typically try to dampen sharply rising consumer prices with interest rate hikes, Erdogan — now Turkey's president — has opposed higher rates claiming they could cause even higher inflation.

Decision in two weeks

But the central bank said Monday that "recent developments regarding the inflation outlook indicated significant risks to price stability, pledging it would take action.

"Our monetary stance will be adjusted at the September Monetary Policy Committee Meeting in view of the latest developments," the lender said of its forthcoming meeting on September 13.

Also on Monday, Erdogan denounced the dollar as an obstacle to global trade. "We're proposing to trade in our own currency rather than the US dollar," he told a summit in Kyrgyzstan.

Russia, which has been struggling with Western sanctions, has in recent weeks also been attempting to move away from the greenback in international trade deals.

hg/jd (dpa, AFP)