Inflation targeting

The Turkish Central Bank should immediately cut interest rates, Economy Minister Nihat Zeybekci said on Jan. 13, citing the country's inflation target of 5 percent this year.

A vocal critic of the Central Bank's policies, Zeybekci told broadcaster A Haber in an interview that rates could be cut to as low as 6 percent. The bank's one-week repo rate currently stands at 8.25 percent.

BELGRADE - The inter-annual inflation will see a moderate increase after January this year, approaching the lower limit of the allowed deviation from the target, which is set at 2.5 percent by mid 2015, the National Bank of Serbia (NBS) said in a release on Monday.

Turkey?s economic growth in 2014 is expected to be around 3 percent, Finance Minister Mehmet ?im?ek has predicted, below an official target of 3.3 percent in the country?s medium-term program.

Inflation rates made a surprise in December and were below the annual inflation expectations. The market expectation was for a slight price increase, but the figures announced the other day showed that consumer prices had dropped 0.44 percent in December.

Annual inflation in Turkey ticked up to 8.17 percent in 2014, slightly higher than 2013 and well over the Turkish Central Bank's medium-term target, the state statistics office said Jan. 5.
      
However the figure was lower than expected by analysts, with inflation falling 0.44 percent in December from November.
      

NBS keeps key policy rate at 8 percent

BELGRADE -- The Executive Board of the National Bank of Serbia (NBS) decided on Thursday to keep its key policy rate at the present level of eight percent.

BELGRADE - The Executive Board of the National Bank of Serbia (NBS) decided Thursday to keep its key policy rate at the present level of eight percent, the central bank said in a release.

In making the decision, the Executive Board was guided by the fact that y-o-y inflation is still moving below the lower bound of the target tolerance band, the NBS said.

Being one of the few Turkish economy pessimists sometimes makes me question my knowledge of economics. Luckily, the International Monetary Fund (IMF)’s annual report on Turkey arrived just in time to confirm my economic sanity- as I found many of the recurrent themes from my columns in the report.

A large group of professional forecasters cut their outlook for eurozone inflation and growth, underlining a trend that could prompt the European Central Bank to take more policy action to kick-start the region's flagging economy.

Despite the fall in world commodity prices, primarily oil, in Turkey inflation rates cannot be pulled down to the desired level. Central Bank Governor Erdem Başçı announced the Inflation Report last week, saying that they had expected a fall in inflation in October, but the opposite happened.