Turkish Central Bank cuts inflation forecast for 2020

ANKARA

The Turkish Central Bank on Thursday revised its year-end inflation forecast to 7.4% for 2020, down from 8.2%.

The 0.8 percentage point fall was driven by the downward revision in the projections of the output gap and food inflation, the Central Bank governor said while presenting the second inflation report.

Murat Uysal said that the figure is expected to fluctuate between 5.5% and 9.3% at end-2020.

He added that recent monetary and fiscal measures will contribute to financial stability and post-pandemic recovery by supporting the potential output of the economy.

Stating that the economic recovery is expected to start in the second half of 2020, Uysal said its rate will depend on the course of the normalization process in Turkey as well as the global economy.

"We have had our estimations in a framework where the effects of the coronavirus outbreak on global and domestic volatility and economic activity will gradually weaken in the second half of the year," Uysal stressed.

The effect of demand conditions on inflation will become more evident with the easing of health measures and the decline in annual inflation will accelerate as of July, he underlined.

The bank kept the annual inflation projection for next year at 5.4%, he added.

The country's annual inflation rate in March stood at 11.86%, down from 12.37% the previous month, the Turkish Statistical Institute data showed.

Responding to a question on the IMF, the governor said no resource or swap negotiation is with the fund yet.