Inflation slows down in November

Bloomberg

Inflation slowed to 10.8 percent from 12 percent the month before, the Ankara-based statistics office said on its Web site yesterday. In the month, prices rose 0.8 percent.

The decline in the inflation rate backs up the Central Bank’s unexpected decision to cut the benchmark rate by half a point to 16.25 percent in November, saying the global credit crisis would lead to a faster-than-expected slowdown in inflation. Consumer confidence fell to a record in November, exports tumbled and carmakers across the country have suspended production.

Slower inflation "increases the chance for further rate cuts," said Yarkın Cebeci, economist for JPMorgan Chase in Istanbul, speaking before the figures were announced. "Domestic demand is weakening sharply and added to that is the impact of lower energy and commodity prices."

Turkey’s Central Bank cut rates on Nov. 19 to "partially" compensate for the impact of the global crisis, according to the minutes of the meeting released on Dec. 2. The financial crisis subjected Turkey to "an additional tightening that wasn’t justified by the needs of monetary policy," the Bank said in the minutes. The reduction "partially compensated for the additional tightening."

The global crisis has forced sales of emerging market assets and driven the Turkish lira down about 19 percent against the dollar since October.