Turkish Central Bank: Inflation to remain above 5% target.

By bne IntelliNews February 25, 2014

It is envisaged that factors affecting inflation adversely will keep inflation indicators considerably above the 5% target for a while, the Central Bank said in the minutes of the latest monetary policy committee meeting, citing food prices, tax adjustments, and weak TRY.

On February 18, he Central Bank kept its interest rates unchanged as widely expected after last month’s aggressive rate hike. The Bank kept one-week repo rate at 10%, overnight lending rate at 12%, and borrowing rate at 8%.

Recent and lingering external uncertainties coupled with the elevated domestic uncertainties caused additional exchange rate movements, which weighed on the risk of inflation exceeding the target for a protracted period, the Bank explained. Moreover, the recent tax adjustments and the persisting unfavourable course of food prices also exacerbated the deterioration in the inflation outlook, the minutes read.

The current policy stance will be enough to anchor inflation expectations, tight monetary policy stance will be sustained until there is a significant improvement in the inflation outlook and the liquidity policy may be tightened further if deemed necessary, the Bank said.

Due to tight monetary policy, macroprudential measures and weak capital flows, credit growth has been slowing gradually that could support the current account (CA) rebalancing, according to the Bank which  expects the CA deficit to display a significant improvement in 2014. The recent uncertainty might cause private demand to weaken in the first quarter, the Bank also said.

Related Articles

Turkish exporters' association chief dismisses benefits of fast depreciating lira

The fast depreciation that has afflicted the Turkish lira in recent weeks does not bode well for the Turkish economy and the central bank should be more proactive in combating it when necessary, ... more

Turkish central bank releases $500mn of liquidity via new deposit swaps market

The Turkish central bank on January 18 provided around $500mn of liquidity with a maturity of one-week to Turkish lenders at the first auction held under the scope of the newly launched FX ... more

Turkish prosecutors demand lifetime jail sentences for leaders of pro-Kurdish HDP

Turkish prosecutors have demanded up to a 143-year jail sentence for Selahattin Demirtas, co-leader of the pro-Kurdish HDP, party and 83 years for the other co-leader, Figen Yuksekdag, ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss