ANKARA - Turkish Central Bank (CB) decided to tighten its monetary policy due to risk of rise in inflation.
Turkish CB`s Monetary Policy Board published the minutes of its meeting on April 17th.
The board said in the summary that the rising trend in food and energy prices and the global financial uncertainties created an upward risk in inflation.
It expressed the need to take into consideration all these risks while making future projections about inflation rates.
Central Bank Governor Durmus Yilmaz said the bank expected that the inflation would drop to 4.9 percent in 2010 and to 4.0 percent in 2011.
The board said the deterioration in inflation expectations might require a tight fiscal policy for a considerable period but pointed out that prudent monetary policy in itself was not sufficient for attaining price stability.
It said support from fiscal policy and structural reforms were critical in this respect.
"Sound fiscal policy had been one of the main factors in driving inflation to single digits. The role of fiscal policy will continue to be critical in road to price stability," it said.
The CB, indeed, took into account the said risks in its survey of expectation.
Earlier on Wednesday, Yilmaz said that year-end inflation rate for 2008 was expected to stand at 9.3 percent.
Yilmaz said year-end inflation rate for 2009 would be somewhere in between 4.9 percent and 8.5 percent with a medium of 6.7 on a 70 percent probability.
The governor also said it would take more than two years to get close to a targeted 4 percent in the medium term, however added that this would not mean the bank would pursue a loose policy.
(OZG-GC)