Turkey"s lira sank to record lows on Thursday after the central bank cut rates as expected, while most other emerging market stocks and currencies rose on easing uncertainty over the U.S. Federal Reserve. The lira sank more than 5%, crossing 15 to the dollar as the bank cut rates by 100 basis points (bps) to 14%. But the bank also signalled that it would pause its easing cycle, saying it decided to complete the use of the limited room available to cut. read more The bank has now trimmed rates by 500 bps this year, in an extension of President Tayyip Erdogan"s unorthodox view that high interest rates cause inflation. The move saw the lira lose about half its value to the dollar, while inflation crossed the 20% mark. "We expect that even though they are now staying on hold, the fact that inflation will be peaking further, and that the U.S. central bank is in a tightening mode- there"s a bias towards a weaker lira," said Jakob Christensen, chief analyst and head of emerging market research at Danske Bank. "I am concerned about the inflation outlook in the next two to three months, as the sharp weakening in the lira feeds through... inflation will definitely go above 30%." Erdogan"s repeated changing of central bank members, along with the resignation of Finance Minister Lutfi Elvan this month, has eroded investor confidence in Turkey"s currency and debt markets. Lira timeline December 2021 Lira timeline December 2021 Turkish stocks (.XU100) jumped 2% to a record high as equities were seen as the safest way to maintain exposure to the country. Broader emerging market stocks and currencies rose, with MSCI"s stock index (.MSCIEF) up 0.7% after three straight days of losses. The Federal Reserve said it would end its pandemic-era bond purchases in March and flagged three 25 bps interest rate increases in 2022 - which is likely to be negative for risk-driven assets. read more But the move also cleared a lot of uncertainty around the Fed"s plans for tapering, which had kept investors apprehensive of emerging markets in recent weeks. Most emerging market central banks have been raising interest rates this year to combat higher inflation. Following rate increases in Hungary and Chile this week, Mexico is expected to raise rates later in the day. Russia"s rouble was flat against the dollar, with the Russian central bank expected to hike rates by at least 100 bps on Friday. Elsewhere, Brazil"s Economy Minister Paulo Guedes said that the International Monetary Fund will end its mission in Brazil in June 2022, adding that the institution has been consistently wrong on its economic forecasts. read more For GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX For TOP NEWS across emerging markets For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see Reporting by Ambar Warrick Editing by Robert Birsel, William Maclean Our Standards: The Thomson Reuters Trust Principles.