The Central Bank of Turkey raised its annual inflation forecast at the end of the year to 60.4% from 42.8% three months ago, and increased its average forecast for the end of 2023 to 19.2% from 12.9%, according to a review by Bank Governor Shihab Kavcioglu of a quarterly inflation report.
A Archyde.com poll showed that economists expect inflation of 70% by the end of this year.
Kavcioglu said the bank will continue to take steps to manage any unusual developments for commercial and consumer loans, which have recently declined.
The Turkish Central Bank keeps the key interest rate constant at 14%, despite the rising cost of living.
The bank’s quarterly presentation showed annual inflation expected at around 90% in the fall before it eased. The inflation rate approached 79% last month after a series of unconventional interest rate cuts last year and energy price hikes.
Under pressure from President Recep Tayyip Erdogan for monetary stimulus despite inflation rising to a 24-year high, the central bank is targeting a rate at around five percent and has consistently downplayed price pressures over the past two years.
Kavcioglu said that while consumer price inflation remained above expectations in June, core inflation showed a more positive outlook and that lower demand should help in the second half of the year.
He was also optimistic about the current account deficit, which rose this year, and said that the balance will improve once global commodity prices return to normal, with the help of Turkish tourism revenues that far exceeded expectations.