Turkey credit impetus supporting economic recovery – central bank

Turkey’s central bank said a revival in the credit market and consumer demand has started supporting a moderate recovery in economic activity.

Inflation expectations are also improving while lira volatility has abated, the central bank said in its Financial Stability Report published on Friday.

Turkey’s government is seeking to return the economy to growth following a currency crisis last year that sparked a deep economic downturn. The economy will probably expand between 4 percent and 5 percent in the final quarter of the year, Treasury and Finance Minister Berat Albayrak said on Thursday.

The central bank said it will continue to use all tools at its disposal to ensure price and financial stability.

The bank has cut interest rates by 1,000 basis points, or 10 percentage points, to 14 percent since July as inflation slowed towards single digits. The bank next meets on interest rates on Dec. 12 and, with consumer price inflation running at 8.6 percent, most economists expect a further reduction.

The government is targeting economic growth of 5 percent next year. Albayrak said the government could comfortably achieve that goal.