The Central Bank of the Republic of Türkiye (CBRT) on Thursday revised its year-end inflation forecast upward for both 2022 and 2023 amid increasing energy and food costs.
The annual consumer inflation is expected to hit 65.2% this year, revised up from the previous projection of 60.4%, Central Bank Governor Şahap Kavcıoğlu told a meeting held to release the bank's last quarterly inflation report this year.
Inflation is estimated to fall to 22.3% at the end of 2023 and 8.8% by the end of 2024. The previous forecast of the bank for 2023 was 19.2%.
The annual inflation rate in Türkiye was at 83.45% in September.
"We anticipate that, together with the stabilizing effects of our macroprudential measures on monetary developments, the supply-demand balance, the current account balance, and the stable course in the foreign exchange market will have a positive impact on inflation expectations and pricing behavior," Kavcıoğlu said.
The governor said food prices are projected to complete 2022 at 75%, and 2023 at 22%.
When asked how much the interest rate cut will contribute to reducing inflation in the future, Kavcıoğlu said: “Interest cuts support production. As a result of the increase in production, this will be reflected in prices in a sustainable way as the costs, access to finance and financing costs decrease.”
“In addition, the increase in employment and growth with the increase in production is something we see in this policy,” he also said.
The CBRT in its last meeting lowered its key policy rate by 150 basis points to 10.5%.
