Turkish central bank raises 2020 inflation forecast higher to 12.1 percent

Turkey’s central bank governor Murat Uysal speaks during a news conference in Ankara, Turkey. (Reuters)

Turkey’s central bank raised its mid-point inflation forecast for end-2020 more than 3 percentage points to 12.1 percent on Wednesday, saying that an expected downward trend in the second half of the year had not materialized.

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Governor Murat Uysal said higher import costs, with the lira tumbling to record lows beyond 8.2 to the dollar, rising food prices and strong credit growth were the main causes of the upward revision.

Read more: Turkish lira again weakens to record low beyond 8.1 against US dollar

He also said the bank’s decision last week to leave its policy rate unchanged at 10.25 percent while raising the late liquidity window, which triggered fresh pressure on the currency, provided flexibility and was not a “lasting deviation” from the structure of its monetary policy tools.

Turkey’s economy had seen a V-shaped recovery from the slowdown caused by the COVID-19 pandemic, Uysal said in a briefing on the bank’s latest quarterly inflation report.

“Despite our evaluation ... inflation was higher than foreseen with credit growth. Annual inflation improved year-on-year and remained within the predicted range, but the outlook for the remainder of the year points to a high trend.”

Last Update: Wednesday, 28 October 2020 KSA 16:30 - GMT 13:30