Inflation targeting

Turkey's Central Bank (CBRT) on Oct. 28 revised up its year-end inflation forecasts for the next three years while keeping its medium-term target at 5 percent.

Inflation in the Eurozone reached a record 3.4% for the last 13 years in September, according to Eurostat data. This is an increase of 0.4% compared to August. Core inflation, excluding food, energy, alcohol and tobacco, rose to 1.9% from 1.6% in August. The European Central Bank (ECB) expects the rate to rise to 4 by the end of the year, which would exceed the bank's target twice.

The European Central Bank announced that the consumer price index of the Eurozone has edged to its highest level in a decade. The bank admitted that it had underestimated the potential risk of price increase in EU. The latest figures may provoke a change in the overall ECB policy aimed at containing inflation at significantly lower levels, Reuters elaborated.

Turkey's Central Bank will release its third inflation report of 2021 later this week on July 29.

In the second report, which was unveiled at the end of April, the bank increased the year-end inflation forecast to 12.2 percent for this year, up from 9.4 percent in the January report.

Turkey will never deviate from its inflation target for the sake of short-term gains, the country's finance minister said on June 18. 

"The fight against inflation is at the center of all our policies," Lütfi Elvan said at a meeting with businessmen in the northwestern province Bursa.

"What matters to us is the sustainability and inclusiveness of growth," he added.

Turkey's Central Bank on June 17 kept its one-week repo rate- also known as the policy rate- steady at 19%, in line with market expectations.

After the committee's sixth Monetary Policy Committee meeting this year, the bank said in a statement that "high levels of inflation expectations continue to pose risks to the pricing behavior and inflation outlook."

The Turkish Central Bank will ensure the strength and credibility of the Turkish lira with the determination of its fight against inflation, the bank's new governor said on March 30. 

"We will continue to use all the tools we have, independently and effectively," Şahap Kavcıoğlu said during an ordinary general assembly of bank officials.

The Turkish Central Bank's newly appointed governor met on March 24 with the general managers of banks and discussed a range of issues including inflation, monetary policy, global developments and the demands of the banking sector.

Turkey's central bank on March 18 hiked its main interest rate by a higher-than-expected 200 basis points to 19 percent to counter rising inflation and the dropping value of the lira.

The bank said it "has decided to implement a front-loaded and strong additional monetary tightening" after seeing the annual inflation rate climb to 15.6 percent last month.

In November, President Recep Tayyip Erdogan appointed a new finance minister and central-bank governor. Subsequently, the country's monetary-policy framework underwent a long-overdue normalization (with a cumulative rate hike of 675 basis points in two months), and the lira regained 10% of its lost value by the end of the year.