Bloomberg News

Turkish Central Bank Will Accept Inflation Spike, Dunya Reports

October 11, 2011

Oct. 11 (Bloomberg) -- Turkey’s central bank will accept faster inflation this year as the price for rebalancing the economy in favor of exports, Dunya newspaper reported, citing Hakan Kara, head of the bank’s research department.

The weaker lira may add about 3.5 percentage points to inflation, Kara said in a speech in Istanbul, according to the newspaper. More than half of the impact has already been felt and it will subside in the first quarter of next year, he said.

A slowing economy will limit the second-round effects of the price rises and the bank is confident of meeting its 2012 inflation target of 5 percent, Kara said.

Trying to drive the rate below 5 percent is “not very rewarding or effective,” Kara said, answering a question on what the bank believes is Turkey’s structural rate of inflation, Dunya said.

To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net

To contact the editor responsible for this story: Steve Bryant at sbryant5@bloomberg.net


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