(Bloomberg) — Turkey’s central bank raised its year-end inflation forecast, a surprise move that underscores the challenge it faces in slowing price growth from its current level of almost 70%.
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Speaking at a quarterly presentation in Ankara on Thursday, Governor Fatih Karahan said the central bank now projects inflation ending 2024 at 38%, from a previous forecast of 36%, and left next year’s estimate at 14%. Officials see their forecasts as targets meant to shape policy while doing “whatever it takes” to smother inflation.
While the revision aligns more with economists’ expectations, it’s at odds with the central bank’s previous messaging. Deputy Governor Cevdet Akcay said in February that the 36% goal was an “ambitious but attainable target.”
The updated projections are likely to trigger speculation about whether the central bank is done raising interest rates after an aggressive tightening cycle. It’s lifted its benchmark to 50% from 8.5% last June.
Karahan said price growth has exceeded forecasts over the past three months but policymakers “will definitely not allow a permanent deterioration in the inflation outlook.” The central bank is determined to maintain a tight monetary policy stance until inflation falls to levels consistent with the target.
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