Turkish central bank nearly doubles inflation forecast to 42.8% for 2022

Turkish central bank nearly doubles inflation forecast to 42.8% for 2022

Reuters/Istanbul

Turkey’s annual inflation will peak at around 70% by June before declining to near 43% by year-end, the central bank forecast on Thursday, almost quadruple its forecast before a full-blown currency crisis sent inflation to a two-decade high.

The central bank slashed its policy rate by 500 basis points to 14% last year as part the new economic plan.

The cuts sparked a currency crisis that sent inflation to 61% in March amid a rise in global energy costs due to Russia’s invasion of Ukraine.

Governor Sahap Kavcioglu made the forecast of inflation peaking at around 70% before June in a presentation on Thursday, adding it should fall to single digits by end-2024.

Disinflation will begin in coming months “thanks to a gradual decrease in supply-demand mismatches and disruptions in supply chains, in addition to the results of the steps taken for price stability,” Kavcioglu said.

By the end of this year, annual inflation would stand at around 42.8%, the governor said, near double the central bank’s previous forecast of 23.2%.

Its forecast for end-2022 stood at 11.8% in October.

The median estimate in the latest Reuters poll stood at 55.5%.

The central bank has focused on wiping out Turkey’s current account deficits by boosting