The Turkish Central Bank now believes inflation will end this year at 6.2%, lower than its previous estimate of 6.5%, because it forecasts a drop in the fourth quarter. The bank also trimmed its forecast inflation for next year from 5.2% to 5.1%. The revisions were announced by central bank governor Erdem Basci a news conference in Ankara today to announce the bank’s quarterly assessment of inflation.
Basci said that while price increases are expected to increase for July, inflation isn’t expected to hit double figures and will stabilise at 5% in the medium term.
After hitting a 3 year high of 11.1% in April, inflation declined to 8.3% in May before jumping back to 8.9% in June. In order to continue taming inflation while maintaining economic growth Basci is lending at rates between his benchmark of 5.75 percent and an upper limit of 11.5 percent on a daily basis.
The central bank’s measure of core inflation will continue declining, Basci said.
The lira fell less than 0.1 percent to 1.8226 per dollar at 10:43 a.m. in Istanbul. Yields on two-year government bonds declined one basis point, or 0.01 percentage point, to 7.88 percent.