Central bank officials said in a statement that inflation was “higher than expected” in February and there was a “deterioration” in their outlook for consumer prices increases, forcing them to raise interest rates once again—just two months after they had declared an end to their hiking cycle. “Tight monetary stance will be maintained until a significant and sustained decline in the underlying trend of monthly inflation is observed, and inflation expectations converge to the projected forecast range,” they added.

The move means there have now been 3,650 basis points of cumulative interest rate hikes in Turkey since the May 2023 presidential elections—but that still hasn’t been enough to tackle inflation. 

Like many nations, Turkey suffered from surging fuel and food costs after Russia’s 2022 invasion of Ukraine. But the issue was more severe for Turkey, which relies heavily on foreign energy and food. Other problems—including Trump-era sanctions, particularly on steel; unconventional monetary policy that was enforced by Turkey’s president; and high private debts—have also combined to create spiraling price hikes since 2018.

After hitting a peak of 85% in October 2022, year-over-year inflation in Turkey fell sharply to just under 40% by the middle of 2023—but since then it’s come back with a vengeance. Consumer prices surged 67% from a year ago in February. And that’s only according to official data—unofficial estimates suggest that the true inflation rate in the country could be north of 100%. This unacceptably high inflation is why most experts say Turkey’s central bank made the right decision hiking interest rates on Thursday, even if it was unexpected.

“The decision to respond so quickly to the recent strong inflation figures and hike rates before the local elections is clearly a very encouraging signal for the policy shift and should help to maintain investor confidence,” Capital Economics’ senior emerging markets economist, Liam Perch, wrote in a Thursday note.

The Turkish lira responded positively to the move on Thursday, falling from its record low of 32.36 to the U.S. dollar to 31.94.  The lira has been under incredible pressure amid runaway inflation and economic instability in Turkey for years, losing 40% of its value against the dollar in the past 12 months, and over 80% of its value since 2019.

Turkey’s central bank’s decision to raise rates comes after it called its 250 basis points in January the last rate increase in the current hiking cycle. At the time, the central bank’s previous governor, Hafize Gaye Erkan—a former First Republic Bank co-CEO who became the first female central bank governor in Turkey before suddenly stepping down in February—said interest rates were already at a level that would be sufficient to tame inflation. 

But since then, inflation has remained an issue,  pressuring the lira and forcing Turkey’s new central bank governor, Fatih Karahan, to take a hawkish stance in the first few months of his term.

It’s a stance that might not have been possible just a year ago. For years, Turkish President Recep Tayyip Erdogan rebuked his central bank’s attempts to raise interest rates to fight inflation, labeling rate hikes “the mother of all evil.” Erdogan even called for lower interest rates, arguing they could somehow tame inflation, a theory that goes against basic economics and central bankers’ advice. But since the summer of 2023, Erdogan seems to have accepted that rising interest rates are the only way to tame inflation, having put his support behind his central bank governor’s recent hawkishness.

Now, with inflation proving to be more difficult to manage than expected, more rate hikes are likely on the way. Capital Economics’ Perch said he doesn’t believe “today’s decision marks the restart of a long tightening cycle,” however another rate hike is certainly “likely” if March’s inflation figures come in hot.