Turkey’s central bank raised its inflation forecasts for this year and next on Thursday, saying continued weakness in the lira currency and higher global oil prices were pushing up prices.
At a news conference announcing its quarterly inflation report, the bank raised its mid-point forecast for the end of 2013 to 6.8 percent from a previous 6.2 percent, and for the end of 2014 to 5.3 percent from a previous 5 percent.
It said the forecasts were based on an expected oil price of $109 a barrel for 2013, from a previous expectation of $107 a barrel in its last report in July. It kept its forecast for annual food price inflation on hold at 7 percent.
Central Bank Governor Erdem Basci said inflation was likely to be volatile in the short term but is on a downward trend and would fall into line with its target of 5.3 percent by the fourth quarter of next year.
He said the weakness of the lira would add 0.4 percentage points to inflation at the end of 2013.
Loan growth was running at around 25 percent in the third quarter, above the bank’s reference rate, and would fall gradually to more moderate levels, he said.