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The Central Bank of Turkey unexpectedly raised its benchmark interest rate by 500bps to 50% in its March meeting and signaled it will continue to tighten policy should the inflation outlook deteriorate further. The decision deviated from the market consensus of a hold, resuming the TCMB’s hiking cycle following the sole hold in February. The Monetary Policy Committee cited its loosely unexpected move as a response to higher-than-expected inflation in February, with elevated services price growth contributing to a deterioration in the underlying trend of monthly inflation and warranting a response from the central bank. Annual inflation was last recorded at nearly 70% in February, the highest in 15 months. The decision was also consistent with the sharp depreciation of the Turkish lira, which continuously extends its record low. The central bank expects inflationary pressures to remain before the disinflation trend begins in the second half of the year.