Mar 19 2019

Albayrak says Turkish inflation, interest rates to fall quickly

Turkey’s inflation rate will drop to single digits by around September, Treasury and Finance Minister Berat Albayrak said.

The rate of consumer price inflation will slow to much lower than the government’s year-end goal of 15.9 percent, Albayrak said in comments carried by local media including Dünya newspaper on Tuesday.

“We are taking the first steps for a deep-rooted and permanent transformation,” he said. “We will lower inflation and interest rates to single digits in the shortest possible time.”

Albayrak’s outlook for inflation differs markedly from that of the central bank, which says that while inflation is on a downward trend, risks to price stability in the country persist. Consumer price inflation slowed to 19.7 percent in February from a 15-year high of 25.2 percent in October.

Albayrak said food prices had started to halve after the government started selling basic foodstuffs at discount stores. The decline in inflation will also be supported by seasonal conditions in food production and base effects, he said.

The minister was speaking less than two weeks before nationwide local elections on March 31. Many Turkish consumers are seeing their spending power slashed by high interest rates – the central bank’s benchmark interest rate is 24 percent – and last year’s slump in the value of the Turkish lira, which has made imported goods more expensive.

Albayrak said credit growth in Turkey was also returning and had increased by 43.5 billion liras ($8 billion) in February. Some 70 billion liras of “hot money” has also entered the country in the first 2.5 months of the year, he said.