Turkish central bank says inflation expectations not at desired levels

By bne IntelliNews August 19, 2015

Inflation expectations are still above the desired levels and exchange rate movements delay the improvement in the core inflation indicators, said the central bank on August 19 in a presentation to economists.

On the positive side, food and energy price developments help disinflation in the short run, while the decline in import prices limits the pass-through from exchange rates to domestic inflation, the bank noted.

End-year inflation expectations declined to 7.65% in August from 7.71% in July, the central bank’s latest expectations survey showed.

At the monetary policy committee meeting on August 18, the central bank kept the benchmark rate (one-week repo) kept at 7.5%, while it held the ON borrowing and ON lending rates steady at 7.25%, and 10.75, respectively.

Here are the other highlights from the bank’s presentation:

* GDP continues to grow at a moderate pace, driven mainly by consumption expenditures.

* Consumer confidence and investment tendency point to a moderate private domestic demand.

* Exports and imports continue to decline in USD terms, reflecting the movements in USD/Euro exchange rate, slowdown in global demand and geopolitical developments.

* The favourable impact of lower oil prices on the current account balance will be more pronounced in the forthcoming period.

* Further improvement in current account balance is expected in the forthcoming period.

July CPI by Main Expenditure Groups (%)
  Weights m/m y/y
Headline 100 0.09 6.81
Food and non-alcoholic beverages 24.25 0.28 9.25
Alcoholic beverages and tobacco 4.82 1.16 3.28
Clothing and footwear 7.38 -4.97 4.06
Housing, utilities 15.79 0.33 8.15
Furnishings, household equipment 7.78 1.60 8.69
Health 2.57 0.32 6.49
Transportation 15.38 0.41 0.92
Communications 4.38 -0.01 1.19
Recreation and culture 3.54 -0.18 7.72
Education 2.53 0.51 6.15
Hotels, cafes and restaurants 6.98 1.21 13.80
Miscellaneous goods and services 4.60 0.10 9.31
Source: tuik      

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