Turkey’s Inflation Rate slows less than Expected

Turkey’s annual inflation rate in January slowed less than expected, sending the lira higher as the central bank ruled out an extraordinary meeting to cut interest rates on Wednesday.

The consumer price index rose 7.24% from a year earlier and was 1.1% higher than the previous month, the state statistics agency said Tuesday.

January’s CPI was expected to be up 6.8% annually and 0.67% higher than a month earlier, according to a survey by The Wall Street Journal.

Turkey’s annual inflation rate was 8.17% in December.

The domestic producer price index increased 3.28% on the year and rose 0.33% on the month.

The central bank said after the release of the data that its Monetary Policy Committee would assess the country’s inflation outlook in detail at its regular meeting which will be held on the Feb. 24.

Governor Basci said on Monday depending on the “strength of disinflation, we will decide whether to call a meeting or not.” He said last week he might convene an extraordinary monetary policy committee meeting on Feb. 4 if the annual inflation rate dropped more than one percentage point in January.

His comments came amid mounting government pressure to ease borrowing costs to bolster economic growth. Turkey’s lira weakened to a record low of 2.4479 against the dollar on Friday on expectations of a rate cut and a broader emerging market selloff.

At 0825 GMT, the Turkish lira was trading at TRY2.4144 against the dollar, compared with TRY2.4328 before the data release. The yield on two-year benchmark government bonds was 6.98%, compared with 6.95% early Tuesday. The main BIST-100 stock index was down 0.3%.

Source: MarketWatch