UPDATES WITH MORE REMARKS BY CENTRAL BANK GOVERNOR
By Tuba Sahin
ANKARA (AA) - Turkey's Central Bank on Wednesday raised the year-end inflation forecast for both this year and next.
Turkey's year-end inflation rate is expected to hit 12.1% for 2020, up from 8.9% in its previous report, the Central Bank governor said in presenting the latest inflation report.
Murat Uysal said the figure will fluctuate between 11.1% and 13.1% through the end of the year with a 70% probability.
The upward revision was driven by the higher course of exchange rates, output gap, and food prices.
The bank also revised upwards annual inflation for next year to 9.4% from 6.2% before stabilizing to around 5% in the medium term.
The governor said the revisions are based on the assumption that there would be no second wave of the coronavirus pandemic.
Pointing out that annual consumer inflation in the third quarter stayed close to the upper limit of the forecast band presented in the bank's previous report, Uysal said: “Inflation followed a higher-than-envisaged path as a result of fast economic recovery with strong credit impulse and financial market developments."
As laid out in Turkey's new economic program announced by the government this September, the country's inflation rate target is 10.5% this year, 8% next year, and 6% in 2022.
According to the latest data from the Turkish Statistical Institute, the country's annual inflation rate in September was at 11.75%, down slightly from 11.77% the previous month.
The strong recovery in exports of goods, relatively low levels of commodity prices, and the level of the real exchange rate are expected to support the current account balance in the coming days, Uysal noted.
He added that Turkey’s tight stance in monetary and liquidity policies will be maintained until the inflation outlook shows significant improvement.