Turkiye’s central bank stuck to its forecasts for a sharp drop in inflation on Thursday, saying the increasing predictability of the lira’s exchange rate plus financing support meant there was no longer the basis for large price rises.
Presenting a quarterly economic report, the bank’s governor Sahap Kavcioglu stood by previous year-end annual inflation forecasts for 2023 and 2024 of 22.3% and 8.8% respectively.
While most mainstream economists expect Turkiye’s inflation, which hit a 24-year high of 85% back in October and was 65% in December, to continue to cool in the coming months, they see it staying well above the central bank’s projections.
The median estimate for inflation at end-2023 in the latest Reuters poll was 42.5%, for example, and 26.4% for 2024.
Kavcioglu, who has slashed interest rates from 19% to 9% over the last year, said data were confirming the slowdown and monthly rates were getting closer to historical averages too.
Pricing behaviour should follow, he added.
“In an environment where cost shocks are fully reflected, predictability has increased in exchange rates, company profitability has improved and financing costs are supported, there is no basis for the continuation of high price increases,” he said.
The central bank’s forecasts also show oil prices at $80.8 in 2023, slightly above its $79.3 forecast three months ago.
“The fact they are continuing to show confidence that inflation will fall sharply does not surprise me,” said Cristian Maggio Head of Emerging Markets Strategy at TD Securities in London.
“They are not trying to achieve their inflation target; they are trying to keep the lira stable and keep growth as buoyant as possible ahead of the elections in May,” he said, noting the bank’s 9% interest rate was still 55% below the current annual inflation rate.
President Recep Tayyip Erdogan signalled last week that Turkiye will hold elections on May 14, a month earlier than he had earlier flagged.


[ad_2]

Turkiye’s central bank sticks to forecast for inflation plunge

Turkiye’s central bank governor Sahap Kavcioglu at his office in Ankara (file). Presenting a quarterly economic report yesterday, Kavcioglu stood

Read more

Turkiye top bank CEO says capital boost to help it drive economy in ’23

Alpaslan Cakar, the CEO of Turkiye’s biggest bank Ziraat and chairman of the board of the Banks Association of Turkiye,

Read more

Turkey Current-Account Deficit Narrowed Sharply on Month in October | MarketScreener

Turkey Current-Account Deficit Narrowed Sharply on Month in October  Marketscreener.com Source link

Read more

Turkey Current-Account Deficit Widened Slightly on Month in September | MarketScreener

Turkey Current-Account Deficit Widened Slightly on Month in September  Marketscreener.com Source link

Read more

IMF staff recommends Turkey raise rates, boost central bank independence | MarketScreener

“To address (Turkey’s) challenges, the mission recommended early policy rate hikes accompanied by moves to strengthen the central bank’s independence,”

Read more

Turkey Inflation Quickened to 25-Year High in October | MarketScreener

Turkey Inflation Quickened to 25-Year High in October  Marketscreener.com Source link

Read more

Russia could buy yuan, rupees, Turkish lira for rainy day fund » Borneo Bulletin Online

CNA – Russia is considering buying the currencies of “friendly” countries such as China, India and Turkey to hold in

Read more

Turkey Current-Account Deficit Narrowed on Month in June | MarketScreener

By Nihad Ahmed Turkey’s current-account deficit narrowed significantly on month in June, data released by the Turkish central bank on

Read more

Turkey’s interest rate gamble backfires with 80% inflation

President Recep Tayyip Erdogan has watched as his currency has been decimated, plummeting by 44 per cent last year and

Read more