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Turkey’s Central Bank raises year-end inflation forecast for 2017

Turkey’s Central Bank raises year-end inflation forecast for 2017

ANKARA: The Central Bank of the Republic of Turkey (CBRT) raised its end-2017 inflation forecast to 8.7 percent on Tuesday. Speaking at a press conference in Ankara, Central Bank Governor Murat Çetinkaya stated that inflation would stabilize at around five percent in the medium term before falling to 6.4 percent in 2018. He said a tight policy stance which focused on bringing down inflation would see the rate gradually reach a five-percent target. This revision in the 2017 year-end inflation forecast is 0.2 point higher, compared to the bank’s April inflation report. It has been driven by upward revision in the output gap along with food inflation projections, Çetinkaya added. Çetinkaya said a fall in assumptions for Turkish-lira-denominated import prices plus a suspension of an automatic tax hike on tobacco products had also impacted on the forecast.

The Central Bank earlier raised its inflation forecast for 2017 to 8.5 percent from a previous forecast of eight percent, according to a second inflation report published on April 28. Turkey’s annual inflation rate fell to 10.9 percent in June, down from 11.7 percent in May, reaching its lowest level in the last four months, the Turkish Statistical Institute announced on July 3.