ISTANBUL: Turkish central bank governor Murat Cetinkaya said another round of monetary tightening was still possible despite a change in a policy statement last week that spooked investors. The lira trimmed losses.
The change in the language of the Monetary Policy Committee’s statement last week, in which it dropped a commitment to deliver further tightening if needed, wasn’t about a “short-term policy direction,” the governor told a news conference in Istanbul on yesterday.
The central bank left its inflation projections unchanged for this year and next at 14.6% and 8.2%, respectively. The lira pared losses after the governor’s remarks, trading 0.2% weaker at 5.9620 per dollar.
Cetinkaya is looking to ease concern that the central bank was leaning to start reducing interest rates. After last week’s statement, Goldman Sachs Group Inc. said the lira could depreciate 15% in the next 12 months. The currency is already the emerging world’s worst performer in April.
Meanwhile, despite the government’s efforts to keep food costs in check, annual inflation actually inched up slightly in March to just under 20%. The central bank’s survey in April found that expectations for price growth at the end of this year rose from the previous month. — Bloomberg
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