Turkish Central Bank Governor Hafez Gay Erkan answers questions during a press conference for the Inflation Report 2023-III on July 27, 2023 in Ankara, Turkey.

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Turkey’s central bank expects inflation to reach 58% by the end of 2023, its new governor, Hafez Gay Erkan, said in his first press conference on Thursday as he looks to “restore expectations as well as forecasts”. Was committed.

The new forecast is more than double the 22.3% outlined in the central bank’s last inflation report three months ago.

Erkan said exchange rate developments, changes in economic policy, stronger-than-expected domestic demand and a new forecast outlook contributed to the higher forecast.

appointed to the central bank on 9 Juneanalysts suggest the arrival of Erkan – with a Türkiye’s new finance minister Could signal a turning point in monetary policy after years of low borrowing costs and rising inflation.

This expectation was met at the end of the month, when the central bank almost doubled its prime interest rate From 8.5% to 15%, this is the first hike since March 2021. 250 basis point increase In July, however, it was lower than expected.

While rising prices have plagued many economies around the world, inflation in Turkey has hit astonishing levels of up to 85%. Inflation came down to 38.2% on an annual basis and 3.9% month-on-month in June.

In his press conference on Thursday, Erkan said that food inflation is expected to be above 60% at the end of the year.

The central bank also revised its forecast for the end of 2024 to 33% and its forecast for the end of next year to 15%.

Erkan said, “Through the decisions on quantitative tightening, we will ensure stable growth in Turkish lira liquidity without excessive increase in exchange rates and domestic demand.”

“We will dynamically adapt the monetary tightening process by continuously measuring the effects of our decisions on inflation, market, monetary and financial conditions.”

Turkish lira has marked new record low Over the past 18 months, traders have digested the low rates in the country despite most other major central banks launching a monetary tightening program.

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