"Turkish C.Bank is willing to take its time in hiking Rates
TEB - 01.08.2011
The CBRT maintained its dovish stance in its Inflation Report. However, the Governor's comments during the press conference supported the TRY
The Bank kept its inflation forecasts unchanged at 6.9% for end-2011 and 5.2% for end-2012 in its Inflation Report, whereas the inflation targets remained at 5.5% for end-2011 and 5.0% for end-2012. Governor Basci stated that the CBRT's baseline scenario envisaged policy rates will be held constant at 6.25% until the year-end. The Bank's assumptions on the oil price (USD 115/bbl) and food inflation (7.5% y/y) were also unchanged for 2011. The report stated that, during the second half of the year, inflation is expected to fluctuate significantly mainly due to the base effects caused by food prices. According to the report, annual food inflation is expected to decline in the third quarter, and increase in the last quarter. Consequently, fluctuations in food prices will determine the trajectory of headline inflation."
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