Turkey\u2019s central bank raised its inflation forecast for this year on higher food prices, and reiterated its policy not to loosen monetary conditions until the outlook improves.<\/p>\n
The bank revised its prediction for year-end inflation to 8.7% from 8.5% and maintained its forecast for 2018 at 6.4%, according to its quarterly inflation report. Food prices, which make up a fifth of the inflation basket and rose more than 14% through June, were the main reason for the change, Governor Murat Cetinkaya said in a press conference in Ankara on Tuesday, Bloomberg reported.<\/p>\n
\u201cMonetary policy will remain tight until there is a noticeable improvement\u201d in the main price indicators, Cetinkaya said, adding that the bank \u201cwill not react to temporary fluctuations in the headline inflation rate.\u201d<\/p>\n
The lira initially strengthened after the data, before swinging back to a loss against the dollar. It was trading 0.1% lower at 3.523 per dollar in Istanbul. The yield on Turkey\u2019s two-year lira notes fell after the governor\u2019s remarks.<\/p>\n
Turkey\u2019s consumer inflation rate was 10.9% in June, well above the regulator\u2019s long-term target of 5%. It probably slowed to 9.9% last month, the lowest level since January, according to the median estimate in a Bloomberg survey. The data is due on Thursday.<\/p>\n
\u201cGovernor Cetinkaya may be signaling that they will not loosen monetary policy following the July inflation figures\u201d said Ibrahim Aksoy, investment strategist at Istanbul-based HSBC Asset Management. \u201cThe central bank expects the drop in July inflation to be temporary according, to the inflation report.\u201d<\/p>\n
Following the bank\u2019s decision to hold all main interest rates unchanged last week, Cetinkaya\u2019s latest remarks show that loosening liquidity conditions remains out of question, according to Ziraat Bank economist Bora Tamer Yilmaz, who attended the governor\u2019s briefing.<\/p>\n
\u201cMarket participants will see this as a commitment not to cut interest rates anytime soon,\u201d Yilmaz said.<\/p>\n","protected":false},"excerpt":{"rendered":"
Turkey\u2019s central bank raised its inflation forecast for this year on higher food prices, and reiterated its policy not to loosen monetary conditions until the outlook improves. The bank revised its prediction for year-end inflation to 8.7% from 8.5% and maintained its forecast for 2018 at 6.4%, according to its quarterly inflation report. Food prices, […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2],"tags":[147,151,150,148,149,152,23],"yoast_head":"\n