Turkish Central Bank expects inflation to increase until June.

By bne IntelliNews March 19, 2014

Inflation is expected to increase until June, partly reflecting base effects, the Central Bank of Turkey said in a presentation to economists on Wednesday.

Both nominal and real exchange rates depreciated significantly since May 2013, exchange rate pass-through remains to be the main driver of inflation as evidenced in the sharp increase in core inflation, the Bank underlined, adding that commodity prices are somewhat stable, partly limiting the cost-push pressures. The Bank, however, says that high volatility in unprocessed food prices continue to pose risks on inflation outlook. Against this backdrop, the tight monetary policy stance will be maintained until there is a significant improvement in the inflation outlook, the Bank reiterated.

As for economic activity, the Bank says industrial production remains robust as of January, yet leading indicators point to some deceleration. Resilience of production can be largely attributed to recent export growth driven by stronger external demand, especially EU demand, according to the bank. Adverse base effects due to gold trade will reverse in the forthcoming months, the Bank said. As a result of these factors, the Bank expects a significant improvement in the current account deficit for 2014.

Related Articles

Erdogan says he plans talks with lenders on cutting Turkish interest rates

Turkey's President Recep Tayyip Erdogan said on October 13 that he plans to hold talks with both public and private lenders on how to lower interest rates. He did not say, however, when those ... more

Turkey's Erdogan turns fire on US ambassador in diplomatic spat over arrest

Turkish President Recep Tayyip Erdogan has turned his fire on the US ambassador to Turkey for the ... more

Turkey-based Eurasian development bank ETDB signs memo to boost return to Iran

The Central Bank of Iran (CBI) and the Turkey-based ECO Trade and Development Bank (ETDB) have signed a memorandum on strengthening bilateral ties, the CBI said on October 10. ETDB is a Eurasian ... more