Türkiye's Central Bank Warns Inflation Could Hit 10.5 Percent by Year-End

Türkiye's Central Bank Governor Durmus Yilmaz said Friday that year-end inflation could reach 10.5 percent, roughly double the official 5.0-percent target. His baseline projection put the figure in a range of 9.1 to 10.5 percent, based on current economic conditions.

Rising oil prices and a weakening lira have driven inflation upward since April. The lira shed roughly 20 percent of its value against the dollar, pressured by capital outflows from emerging markets and domestic political uncertainty. Annual consumer price growth crossed into double digits in June for the first time in two years.

To counter the trend, the Central Bank has raised its key overnight borrowing rate three times since June, lifting it from 13.25 to 17.5 percent.

Both the government and the bank still consider the 2007 inflation target of 4.0 percent achievable. Yilmaz projected next year's rate at between 3.0 and 6.5 percent under the primary scenario, saying "mid-term targets remain achievable under a cautious monetary policy."

Inflation control is central to Türkiye's three-year IMF-backed stabilization program, which carries a 10-billion-dollar loan. That program helped bring inflation down from 29.7 percent in 2002 to 7.7 percent in 2005.

Historical summary. TurkishPress restated this wire report, first published in July 2006, in its own words.