Turkish end-year inflation expectations rise to 6.98% in March

By bne IntelliNews March 13, 2015

End-year inflation expectations rose from 6.77% y/y in February to 6.98% y/y in March, the Central Bank said on March 13, underlining the effects of the recent slide in TRY on inflation forecasts.

Participants of the Central Bank’s monthly expectations survey also revised their 12-month ahead inflation expectations to 6.78% from 6.69% while raising the 24-month inflation forecast to 6.51% from 6.42%. Consumer prices are expected to increase 0.69% m/m in March, higher than the previous month’s estimate of 0.61% for March. The annual rate of inflation quickened from 7.24% in January to 7.55% in February when consumer prices rose 0.71% m/m.

GDP growth expectations for 2015 were cut to 3.3% in March from a previous 3.5% but growth forecast for 2016 was unchanged at 3.8%. The country’s current account deficit is expected to be $39.4 at the end of 2015 whereas the previous estimate was $40.3bn.

Future monetary policy decisions will be conditional on the improvements in the inflation outlook, said the Central Bank in a statement it released after the monetary policy committee meeting on February 24 when it trimmed the main one-week repo rate for a second straight month in a row. The Bank lowered the one-week repo by 25bps to 7.50%, cut its overnight lending rate from 11.25% to 10.75% and overnight borrowing rate from 7.50% to 7.25%. Inflation expectations, pricing behaviour and other factors that affect inflation will be monitored closely, said the Bank in the February 24 statement, reiterating that cautious monetary policy stance will be maintained until there is a significant improvement in the inflation outlook.

Central Bank Expectations Survey            
  Oct Nov Dec Jan Feb Mar
End-Year Inflation (%) 9.16 9.22 9.02 6.82 6.77 6.98
12-Month Ahead Inflation (%) 7.54 7.50 7.21 6.81 6.69 6.78
End-Year Current Account Deficit ($ bn) -47.8 -46.7 -44.6 -41.4 -40.3 -39.4
End-Year GDP Growth (%) 3.2 3.2 3.0 3.4 3.5 3.3
Source: tcmb    

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