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Turkey April CPI in-line, pressure off central bank

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The producer price index rose 0.61 percent on the month, compared with a forecast rise of 1.20 percent, for an annual rise of 8.21 percent.

Analysts said the data showed inflation developing in-line with the central bank's projections of a gradual acceleration as higher fuel, commodity and clothing costs exert upwards pressure.

Inflation fell to a record annual low in March of 3.99 percent.

"The most important thing is there won't be pressure on the central bank in the next 1-2 months in terms of hiking rates," Yarkin Cebeci, economist at JP Morgan, said.

"The possibility of inflation becoming a major pressure on the central bank is over."

The median forecast in a Reuters poll of 17 analysts was for a monthly rise in CPI in April of 0.9 percent on the month after a rise of 0.42 percent in March, and a 1.20 percent monthly rise in the PPI index, after a previous rise of 1.22 percent.

The central bank last week raised its 2011 year-end CPI forecast to 6.9 percent from a previous 5.9 percent, and revised upwards its oil price assumption to $115 per barrel from $95 earlier.

However, the bank also said it did not expect the revision to change its economic scenario, which envisages "limited" monetary policy tightening.

Although it did not clarify how it would tighten policy, analysts expect further hikes to banks' required reserve ratios (RRRs) with interest rate hikes starting in the fourth-quarter.

Last December, the bank introduced a new policy mix of lower interest rates to deter higher yield-seeking hot money, and higher RRRs to absorb liquidity and contain credit growth.

Copyright Reuters, 2011