Thoughts and Observations on Turkish Economy and financial markets. Turkiye Ekonomisi, Borsa, Dolar, Altin, Faiz, Teknik Analiz, Grafik, Hisse Senetleri...

Tuesday, July 29, 2008

Central Bank's 2008 Inflation Estimate

Central Bank finally caught up with the markets and updated its end-2008 inflation estimate to 10.6% from 9.3%. Despite the surprise decline in July inflation, CB determined that oil prices will average $140 for the rest of the year and this warranted an increase in inflation estimate.

Even though i don't think oil prices will be as high as CB estimates, considering that they have been behind the curve since August 2007, I welcome this revision as a step in the right direction. I still suspect that inflation will be above 11% by the end of the year. CB lost considerable credibility since CB president Durmus Yilmaz appointed in 2006. As a result, it is too early to comment on the 2009-2011 inflation estimates. It looks almost certain that Turkey will be one of the countries that will experience double digit inflation rates in 2008.