Turkish central bank raises 2020 inflation forecast to 12.1%

Credit: REUTERS/UMIT BEKTAS

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

Adds comments on late liquidity window

ISTANBUL, Oct 28 (Reuters) - Turkey's central bank raised its mid-point inflation forecast for end-2020 more than 3 percentage points to 12.1% on Wednesday, saying that an expected downward trend in the second half of the year had not materialised.

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.

He also said the bank's decision last week to leave its policy rate unchanged at 10.25% 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."

(Reporting by Ali Kucukgocmen, Daren Butler and Can Sezer, Writing by Dominic Evans Editing by Daren Butler)

((Dominic.J.Evans@Thomsonreuters.com, @DominicJEvans;))

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