Turkısh Central Bank Hıkes 2010 Inflatıon Forecast
The Turkish central bank Thursday raised its inflation forecast for 2010warned an interest rate rise may come sooner than previously expected.
Releasing the bank's quarterly inflation report, Governor Durmus Yilmaz said inflation is now forecast to end 2010 between 7.2%9.6%, with a mid-point of 8.4%. It previously forecast 2010 annual inflation between 5.5%8.3%, with a mid-point of 6.9%.
Yilmaz said the rise in energy prices is expected to continue alongside a gradual economic recovery. He added the economy will most likely grow at a double-digit rate in the first-quarter, although unemployment is expected to remain high for a long time.
He said monetary tightening could be implemented sooner than originally planned if inflation expectations continue to rise or if commodity prices increase faster than expected.
He said the bank has revised up its oil price forecast to $85 from $80 for 2010to $90 from $85 for 2011. The bank also revised up its annual food price forecast to 9% from 7% for 2010to 7% from 6% for 2011.
Yilmaz said the bank expects annual inflation for 2011 between 3.6%7.2% with a 70% probabilitya mid-point of 5.4%. The bank forecasts annual inflation to fall to 5% in 2012.
He said inflation will continue increasing in the second quarter of 2010,will fluctuate in the third quarter before falling significantly in the fourth quarter.
Yilmaz said Turkey will set benchmarkstargets on the budget deficitpublic debt levels under planned fiscal rules which will be legislated by the end of June.
He added that the central bank could consider raising the amount of daily U.S. dollar-buying auctions, but that no decision has been yet made.