Turkey Raises Inflation Forecasts, Aligning With Market Expectations
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Turkey's central bank has revised its inflation forecasts for 2024 and 2025 upwards, bringing them closer to market expectations, reports Bloomberg. This move follows two consecutive months of price gains exceeding initial estimates.
Officials now project inflation to reach 44% at the end of this year and 21% by the end of 2025, up from previous forecasts of 38% and 14%, respectively. These revised forecasts, serving as short-term goals, align with the bank's long-term target of 5% inflation. Economists surveyed by Bloomberg in October anticipate inflation to slow from its current level of just under 49% to 44.2% by the end of December and to 23% a year later.
Governor Fatih Karahan, presenting the bank's latest economic outlook on Friday, emphasized that the significant revisions to the forecasts do not signify a change in the central bank's policy stance. Any future cuts to the policy rate will not be interpreted as a loosening of monetary policy, but rather as a response to improvements in the underlying trend of inflation.
"We will continue our tight policy stance until price stability is restored," Karahan stated.
Karahan's comments signal a reluctance to provide concrete timelines for potential rate cuts, which have been kept at 50% since March. Most analysts have pushed back their expectations for easing, with many now viewing rate reductions before 2025 as highly unlikely.
The Turkish lira remained relatively stable during Karahan's speech, trading 0.4% lower at 34.3606 per dollar. Turkey's main stock index, Borsa Istanbul 100, extended gains to 0.9%, driven by a surge in banking shares.