No basis in Turkey for large price rises, cenbank chief says

No basis in Turkey for large price rises, cenbank chief says

ANKARA (Reuters) – There is no longer basis in Turkey for large price rises given increasing predictability in exchange rates and the support for financing, and data proves that inflation is slowing, the central banks head said on Thursday.

Presenting the quarterly report, Governor Sahap Kavcioglu said the bank stood by its previous year-end annual inflation forecasts for 2023 and 2024, at 22.3% and 8.8% respectively.

Economists expect inflation to cool this year from 65% in December but not as much as the central bank expects. Annual inflation hit a 24-year high above 85% in October after a series of unorthodox interest rate cuts that sparked a currency crisis.

But Kavcioglu said data now confirms the slowdown in annual inflation and monthly rates are getting closer to historical averages, too. Pricing behaviour should follow, he added.

“In an environment where cost shocks are fully reflected, predictability has increased in exchange rates, company profitability has improved and financing costs are supported, there is no basis for the continuation of high price increases,” he said.

The central banks forecasts also show oil prices at $80.8 in 2023, slightly above its $79.3 forecast three months ago.