TURKISH CENTRAL BANK LOWERS INFLATION FORECASTS
Turkey’s Central Bank on January 30 revised its inflation forecast for the country’s economy downward for 2019 and 2020. The Bank forecast Turkey’s year-end inflation rate this year to drop to 14.6 percent from 15.2 percent in its previous report, Central Bank Governor, Murat Cetinkaya, said in the Bank’s first quarterly inflation report for 2019. The governor said the rate will fluctuate between 11.9 percent and 17.3 percent through the end of this year, with a 70 percent probability.
“Increased contributions from demand conditions to disinflation, deceleration in the underlying trend of inflation, as well as the significant decrease in oil and import price assumptions together played an important role in the downward revision in inflation forecasts for 2019,” he said. “We project the inflation rate to be 14.6 percent at end-2019, then to drop to 8.2 percent [compared to 9.3 in the previous report] at the end of 2020, and to be 5.4 percent in 2021.”
According to the Turkish Statistical Institute, in December 2018 Turkey’s annual inflation reached 20.30 percent. Cetinkaya underlined that a tight monetary policy stance will be maintained until the inflation outlook shows significant improvement, adding:
“In this respect, an additional tightening in monetary policy could be introduced when necessary.”
He said inflation is projected to converge gradually to the five percent target under a tight policy stance and enhanced policy coordination focused on bringing down inflation.
The bank also lowered its oil price forecast to $63 per barrel for 2019, down from $80 in its October report.
Annual inflation to rise: survey Meanwhile, the average annual rise in consumer prices in Turkey is expected to be 20.59 percent in January, according to an Anadolu Agency survey on January 31. Turkey’s annual inflation in December was 20.30 percent. Monthly inflation forecasts by a group of 16 economists vary between 0.80 percent and 1.85 percent, with average monthly inflation of 1.26 percent.
In December, consumer prices in Turkey dropped 0.40 percent month-on-month. The economists also forecast that Turkey’s year-end annual inflation would be 16.38 percent on average, with predictions varying between 13.50 and 19.80 percent. Over the past five years, annual inflation saw its lowest level at 6.13 percent in April 2013, while it peaked at 25.24 percent in October 2018.