The Turkish central bank on Wednesday cut its 2019 inflation forecast to over 14% while vowing to keep a tight monetary stance until current fast rising prices fall back.
Consumer price inflation spiked to a 15-year high in October 2018 of over 25% before falling to 20.3% in December, hitting consumers hard as the Turkish lira also weakened.
The central bank said in its latest report that inflation was “likely to be 14.6%” at the end of 2019, down from the 15.2% estimate given in October.
After the announcement in Ankara during a presentation by governor Murat Cetinkaya, the lira hit 5.28 against the US dollar after 0830 GMT, a gain of 0.5% on the day.
The lira lost 28% of its value against the dollar in 2018.
The inflation forecast for 2020 also was cut to 8.2% from 9.3% and the central bank said it hopes price rises will stabilise at “around 5% the medium term”.
The bank, which has a nominal inflation target of 5%, kept the food inflation estimate for 2019 at 13%.
The downward revisions come after oil price falls, improved inflation figures and the strengthening of the lira since the middle of last year.
The bank’s monetary policy committee earlier this month kept its policy interest rate, the one-week repo rate, unchanged for a third time at 24%.
After a currency crisis in August caused by a US-Turkey diplomatic row and concerns over domestic monetary policy, the bank hiked the rate sharply by 625 basis points to 24%.
Cetinkaya struck a defiant tone on Wednesday when he said that “until there is a convincing fall in inflation, we will continue our tight monetary stance”.
He added that if necessary, there could even be further tightening.
President Recep Tayyip Erdogan opposes high interest rates. He has previously referred to interest rates as “the mother and father of all evil,” arguing that high rates cause high inflation.

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