Central Bank governor says it's 'too early' to talk about an interest rate cut

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Turkey's Central Bank has kept the country's year-end inflation forecasts unchanged at 9.4 percent for this year and 7 percent for next year.

The inflation rate will fluctuate between 7.3 percent and 11.5 percent through the end of the year, the bank's governor told a virtual meeting to release the bank's first quarterly inflation report for 2021.

Underlining that inflation is projected to stabilize around 5 percent by 2023, Naci Ağbal said a tight monetary stance will be resolutely maintained until the target is reached.

"The Monetary Policy Committee will continue to use all instruments to reach the 5 percent target," Ağbal said.

"We raised the policy rate, which was 10.25 to first 15 percent and then to 17 percent," he noted, adding that it is "too early" to talk about a reduction in the policy rate.

CLICK - Central Bank keeps interest rate constant

A full-fledged inflation targeting regime will be decisively implemented within a simple operational framework, Ağbal noted.

He stressed that additional front-loaded tightening will be implemented in case of any risks of deviation from the medium-term target path in inflation expectations and pricing behavior.

The bank raised its food inflation forecast to 11.5 percent for 2021, up 1 percentage point from the previous report, Ağbal said.

The bank also hiked its oil price forecast for 2021 to 54.4 US dollars per barrel from 43.8 dollars. The forecast for 2022 is 52.2 dollars.

Ağbal was appointed last November in what was perceived as a move to orthodox management of inflation and the value of the Turkish lira. (HA/VK)