31 August 2022; MEMO: Turkiye's annual inflation is expected to exceed 81per cent in August after the central bank delivered an unexpected rate cut despite continuing price pressures, a Reuters poll showed today, and it was seen declining to just below 71 per cent by end-2022.
Inflation has surged since last autumn when the lira slumped after the central bank gradually cut its policy rate by 500 basis points to 14 per cent in an easing cycle sought by President Recep Tayyip Erdogan.
While inflation is not expected to fall in the next few months, the central bank cut its policy rate by another 100 basis points this month to 13 per cent, citing indications of an economic slowdown.
Inflation has been further stoked this year by the economic fallout from Russia's invasion of Ukraine, as well as the lira's continued decline. The currency shed 44 per cent against the dollar last year, and is down more than 27 per cent this year.
The median estimate of ten institutions participating in the Reuters poll was for annual inflation at 81.22 per cent in August, with forecasts ranging between 80.50 per cent and 82.60 per cent.
The government has said inflation will fall with its economic programme prioritising low rates to boost production and exports with the aim of achieving a current account surplus.
