ANKARA, April 17 (Xinhua) -- Türkiye's central bank raised its benchmark interest rate to 46 percent from 42.5 percent on Thursday, marking a reversal from its recent rate-cutting cycle, as authorities moved to curb renewed inflationary pressures and stabilize financial markets.

In a statement following its policy meeting, the Monetary Policy Committee also raised the overnight lending rate to 49 percent from 46 percent and lifted the overnight borrowing rate to 44.5 percent from 41 percent.

"Monthly core goods inflation is expected to rise slightly in April due to recent developments in financial markets," the central bank said, citing inflationary spillovers from ongoing currency weakness and rising external costs.

The decision comes despite data showing that Türkiye's annual inflation rate eased for a tenth consecutive month in March, falling to 38.1 percent from 39.1 percent in February. The headline figure has steadily declined since hitting a peak of 75 percent in May last year.

However, the monthly inflation rate ticked higher in March, with prices rising 2.5 percent, up from 2.3 percent in February.

Economists have warned that the effects of a depreciating lira and broader market volatility are likely to feed through to consumer prices in the coming months.

The market was rattled in mid-March after former Istanbul mayor Ekrem Imamoglu was detained on corruption charges. The move triggered sharp declines in Turkish assets, with the lira plunging as much as 12 percent against the U.S. dollar before rebounding on central bank intervention. The Borsa Istanbul stock index fell more than 9 percent at one point before recovering.

Economists estimate the central bank sold around 25 billion U.S. dollars in foreign currency reserves to support the lira in the wake of Imamoglu's arrest.

"While March's inflation data was broadly in line with expectations, the fallout from March 19 and its aftermath is already affecting prices and will become more visible in April," said Istanbul-based economist Mustafa Sonmez in comments to Xinhua.

He added that additional factors -- including rising interest rates and energy costs -- are likely to push inflation higher in the near term.

Atilla Yesilada, another Istanbul-based analyst, said Türkiye still faces "notable upward pressures on inflation," particularly in the wake of recent political developments.

International banks also sounded alarms. Spanish lender BBVA raised its year-end inflation forecast for Türkiye to 32 percent from 29 percent on April 4, citing spillovers from the lira's depreciation. ING Bank also warned that continued market volatility could influence inflation expectations.

Türkiye's official inflation target for end-2025 stands at 24 percent.

The central bank had previously slashed interest rates in three consecutive 250 basis-point cuts since December, citing a favorable inflation trajectory and easing cost pressures. Thursday's hike marks the first policy tightening since the easing cycle began. Enditem

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