Turkey CB Unlikely To Loosen Policy This Year On Rising Inflation

(RTTNews) - Turkey's central bank will probably wait until next year before easing monetary policy, influenced by the recent jump in inflation, Liam Carson, an economist at Capital Economics, said.

The CPI Inflation accelerated to 11.2 percent in September from 10.7 percent in August, data from the Turkish Statistical Institute showed on October 3.

The upward trend in inflation was partly driven by a 12.5 percent surge in food prices.

The economist observed that core price pressures continued to build in September, with inflation rising to 11.0 percent from 10.2 percent in August.

Moreover, this was the strongest core inflation in thirteen year, largely driven by a sharp increase in clothing prices.

Capital Economics expects core inflation to fall towards the end of the year as the impact of previous weakness in the lira starts to fade.

The lira was down by almost 15 percent against the dollar on a yearly basis and this has pushed up import price inflation in recent months.

However, unless the lira experiences another large fall the inflationary impact of a weaker currency should fade in the coming months, the economist said.

"Nonetheless, latest CPI data mean that headline inflation will be slower to fall back than we had expected," Carson pointed out.

"Accordingly, while we still expect the central bank to loosen monetary policy over the next year or so, this is likely to begin later than we had previously anticipated."