Turkey raises 2014 inflation target to 7.6% from 6.6%

Wednesday, April 30, 2014

Drop in the value of lira currency and increased energy costs make the Central Bank revise its inflation target

Drop in the value of lira currency and increased energy costs make the Central Bank revise its inflation target

ISTANBUL – Turkey revised its yearly inflation target for 2014 on Wednesday to 7.6 percent from 6.6 after the value of the Turkish lira dropped more than estimated.

Speaking at the ‘2014 Inflation Report’ meeting, Erdem Basci, governor of the Central Bank of Turkey, reiterated the bank’s commitment to maintain tight monetary policy until inflation outlook show clear signs of recovery.

“In this frame, with 70 percent probability of success, we predict inflation to turn out to be between 6.4 percent and 8.8 percent -- 7.6 percent as midpoint -- at the end of 2014,” he said.

Basci said the increase in import and energy costs also affected the bank’s decision to raise the target.

On January 28, the bank more than doubled its overnight borrowing rate from 3.5 percent to 8 percent and raised the overnight lending rate from 7.75 percent to 12 percent in a bold move to protect the country's crumbling lira currency.

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