November 30, 2018 / 9:39 AM / 11 days ago

UPDATE 1-Turkey cenbank expects inflation to gradually converge to target

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ANKARA, Nov 30 (Reuters) - Turkey’s inflation is expected to get gradually nearer to the central bank’s targets, Central Bank Governor Murat Cetinkaya said on Friday, after consumer prices last month surged to a 15-year high of 25.2 percent.

A Reuters poll on Thursday showed annual inflation is forecast to fall to 22.6 percent in November. Economists said inflation was still expected to remain around 20 percent until the middle of next year, well above the central bank’s target of 5 percent.

“By closely monitoring the factors that impact inflation, monetary policy tools will continue to be used effectively in line with the price stability objective,” said the text of a presentation by Cetinkaya, published on the bank’s website.

The lira slumped in August, at one stage as much as 47 percent weaker since the start of the year, on investor concerns about the central bank’s independence and a deterioration in U.S.-Turkish ties.

It has since recovered some ground after a mammoth 6.25 percentage point rate hike in September and an improvement in relations with the United States.

The central bank last month sharply raised its inflation forecast for end-2018 to 23.5 percent from a previous 13.4 percent, acknowledging the impact of a lira sell-off that has shaken confidence in the economy.

“The increase in inflation was driven by developments in forex prices. Inflation is expected to gradually get closer to targets,” the presentation said. (Reporting by Tuvan Gumrukcu and Ece Toksabay Editing by Dominic Evans and Daren Butler)

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