Turkey bank keeps inflation target it missed for 6 years

Turkey’s central bank set an inflation target of five percent for 2018, despite missing the same goal for six years running.

The bank in Ankara said on Tuesday that “inflation will gradually converge to the 5 percent target in the 2018-2020 period.” Monetary policy will continue to be based on inflation expectations, it said in a statement on its website.

Turkey’s inflation rate surged to 13 percent in November, after the lira slid against the dollar and the government took steps to stimulate economic growth through credit guarantees. Inflation will probably remain in double digits until November next year, before ending 2018 at 9.5 percent, Ilhan Demir, an economist at Nomura in London, said in a report to clients on Monday.

The central bank said in its statement that it kept the “uncertainty band” for inflation at 2 percentage points in both directions, as in previous years.

“In 2018, the central bank will continue to use all available instruments in pursuit of the price stability objective,” it said. “A tight stance in monetary policy will be maintained decisively until inflation outlook displays a significant improvement and becomes consistent with the targets. If needed, further monetary tightening will be delivered.”

To read the full statement