Turkiye’s central bank increased its benchmark interest rate on Thursday, marking the resumption of its tightening cycle in response to a renewed surge in one of the world’s highest inflation rates last month.

The monetary policy committee voted to raise the policy rate from 45 percent to 50 percent, citing concerns over the worsening inflation outlook in a statement.

Initially, the central bank had indicated that the January increase would suffice to address the cost of living crisis. However, annual inflation climbed again in February, reaching 67.1 percent.

Despite raising the interest rate from 8.5 percent to 45 percent since June, the bank kept it steady in February.

In response to the persistently high inflation, the central bank declared on Thursday that it would tighten its monetary policy stance further if a significant and sustained deterioration in inflation was anticipated.

With municipal elections scheduled for March 31, economists believe that pressure on Turkish authorities is mounting, given the stagnation in capital inflows and another decline in foreign exchange reserves.

Inflation poses a significant challenge for President Recep Tayyip Erdogan ahead of the elections, particularly as his ruling AKP party aims to regain control of crucial cities like Istanbul, currently held by the main opposition party.

Acknowledging the struggle posed by high inflation in a public event in western Turkey on Wednesday, Erdogan assured employees and pensioners that as inflation subsided, they would reap the benefits of an improving economy.

“We will overcome all these challenges,” he affirmed.