Turkey’s Central Bank raises 2017 inflation forecast

ANKARA – Anadolu Agency

The Central Bank raised its inflation forecast for next year on Oct. 27, citing increasing pressure from the depreciation of the Turkish Lira.

In a press conference held to announce the Bank’s fourth inflation report, Central Bank Governor Murat Çetinkaya said it was revising upward its inflation forecast for 2017, which was 6 percent, by 0.5 percentage points due to the recent volatility of the lira and rising oil prices.

“We expect inflation to be 7.5 percent by the end of 2016. After retreating to 6.5 percent in 2017, we estimate that it will stabilize at 5 percent in 2018,” Çetinkaya said.

He added that they had not changed the forecast for 2016 as upside risks are expected to offset downwards risks.

“In this context, with a 70 percent probability, we forecast inflation to average between 7 and 8 percent in 2016. By the end of 2017, we expect it to be between 5 and 8 percent,” the Bank governor stated.    
  
Çetinkaya said the lira, which recently suffered from sharp volatility and rising oil prices, was starting to recover.

“We raised headline consumer price inflation for 2017 year-end by 0.5 percentage points compared to the previous report, due to the upside impact of increasing import costs despite the downside effects of a decline in food inflation and total demand,” he added.