Turkey’s central bank raises inflation forecast

ISTANBUL — The head of Turkey’s central bank raised its year-end inflation forecast on Thursday and vowed to maintain a tight monetary policy to rein in the country’s runaway consumer prices.

Consumer price growth accelerated to 69.8 percent in April despite a series of interest rate hikes.

Central bank Governor Fatih Karahan on Thursday raised the year-end inflation forecast to 38 percent, up from a previous estimate of 36 percent.

READ: Turkey inflation hits 68.5% ahead of election

The central bank began to raise its key rate in June 2023, gradually taking it from 8.5 percent to 50 percent after President Recep Tayyip Erdogan loosened his objections to such monetary policies.

It decided last month to keep borrowing costs steady but warned it could raise them again if inflation deteriorates.

READ: Turkey central bank holds key interest rate steady

“We are determined to maintain our tight monetary policy stance until inflation falls to levels consistent with our target,” Karahan said as he presented his second quarterly report on Thursday.

“We will definitely not allow a permanent deterioration in the inflation outlook,” Karahan added.

He said inflation is expected to start slowing next month.