Turkey's central bank keeps inflation forecast steady, says reserves fluctuation not abnormal

ISTANBUL: Turkey's Central Bank left its 2019 inflation forecast unchanged at 14.6 percent on Tuesday and governor Murat Cetinkaya said recent fluctuations in the bank's forex reserves were not abnormal.

Speaking at the bank's quarterly inflation briefing, Cetinkaya said it was important to look at medium term trends when looking at reserve levels and there was no deterioration in any parameter of reserve effectiveness.

The bank knew the impact of swap transactions on reserves, and the increase in swap transactions was carried out to support the market in the face of a market anomaly, he said.

Cetinkaya said the bank would decisively use all tools available to bring down inflation in line with targets, forecasting inflation would fall to single digits in the second quarter of 2020.

Investors are increasingly concerned about inflation, which peaked at a 15-year high above 25 percent in October as Turkey weathered a currency crisis that wiped nearly 30 percent off the lira's value last year. In March, Turkey's annual consumer price inflation rose to 19.71 percent.

The lira weakened as far as 5.9850 against the dollar during the presentation, its weakest since Oct. 12.