Central Bank Increases Its Inflation Forecast by 5 Percent

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The Central Bank of the Republic of Turkey (TCMB) Chair Murat Çetinkaya has announced that the inflation forecasts for the years 2018 and 2019 have been increased by 5 percent.

In its inflation report for the third quarter of 2018, the Central Bank has increased its inflation forecast from 8.4 percent to 13.4 percent. It has also raised its inflation forecast for 2019 from 6.5 percent to 9.3 percent.

Some of the highlights from Çetinkaya's statement are as follows:

* In terms of output gap and its impacts on the inflation, the figures for the third quarter are in the negative and they will remain in the negative in the fourth quarter as well.

* We will start to see the effects of the domestic demand especially in the last quarter.

* If it is deemed necessary to take some further steps regarding the communication of the Central Bank, we will do it as well.

* We are of the opinion that the new medium-term programme (OVP) will be important.

* When the contribution of the Central Bank is requested for the works on medium-term programme, we will certainly cooperate with the policy makers as it is always the case.

Oil and commodity prices have also been effective

* The decrease in the value of Turkish Lira as well as the increase in oil and commodity prices have also had an impact on the increase in the Consumer Price Index (TÜFE).

* Çetinkaya has also stated that the forecast for oil prices in 2018 has increased from 68 to 73 US Dollars and the forecasts for food prices in 2018 has been raised from 7 percent to 13 percent. (PT/SD)