Turkey raises inflation forecasts for 2013, 2014
Ankara, July 30, 2013
Turkey's central bank raised its inflation forecasts for the end of this year and next on Tuesday, saying exchange rate volatility posed a threat to prices, and said it may cut its annual growth forecast.
The bank hiked its mid-point inflation forecast for the end of 2013 to 6.2 percent from a previous 5.3 percent, and for the end of 2014 to 5 percent from a previous 4.9 percent.
At a news conference announcing its quarterly inflation report, Governor Erdem Basci said core inflation was expected to rise in the period ahead due to exchange rate volatility.
He said a hike in the bank's overnight lending rate last week, in response to capital outflows that have knocked the lira down as much as 9 percent against the dollar over the past few months, had been sufficient enough a move for now.
The bank is not currently planning to make adjustments to the reserve requirements or reserve option coefficients it uses to fine tune liquidity conditions, he said.
Basci said he expected loan growth still to be running at significantly above the bank's 15 percent reference level at the end of the year before falling to around target in the middle of 2014.
It kept its forecast for annual food price inflation on hold at 7 percent. It said its inflation forecasts were based on an expected oil price of $107 a barrel for 2013, from a previous expectation of $103 a barrel. – Reuters