ANKARA, Nov. 2 (Xinhua) -- Turkey's central bank raised its inflation projections for 2023 and 2024 on Thursday, a move that experts said reflected the country's challenges in containing its rising prices.
The central bank now anticipates inflation to end the year at 65 percent, up from its previous estimate of 58 percent, with a revised forecast of 36 percent for 2024, up from 33 percent.
"Controlling high and volatile inflation will be a long and challenging process," Hafize Gaye Erkan, governor of the bank, told a press conference in Ankara to unveil the last quarterly inflation report of the year.
Erkan attributed the revision primarily to elevated food and energy import costs, and the depreciation of the Turkish lira, which fell to a record low of 28.35 liras per dollar on Thursday.
Official data revealed that Turkey's annual inflation rate rose for the third consecutive month to 61.53 percent in September, marking the highest level this year.
In the face of persistent inflation, the central bank governor pledged to maintain monetary tightening policies and expects a decrease in high inflation by May 2024.
Timothy Ash, a London-based emerging markets specialist, praised the central bank's resilience to rein in stubborn inflation, calling Erkan's pledge to continue monetary tightening a "strong message" about fighting inflation.
"They have a chance," the economist said in a post on the social media platform X.
Ozlem Derici Sengul, an economist and scholar from Istanbul's Bilgi University, said that the new projections are in line with the market forecast and that this update may open the way for new interest rate hikes.
Turkish President Recep Tayyip Erdogan, who had advocated for low borrowing rates, has shifted to more conventional economic policies following his reelection in May and appointed market-friendly economists like Erkan and Mehmet Simsek at the helm of the economy.
Since June, the central bank hiked aggressively the policy rate from 8.5 percent to 35 percent in five consecutive increases to curb runaway inflation that fueled a cost-of-living crisis in the country impacting millions of households.
Early this week, Finance Minister Mehmet Simsek unveiled plans for the privatization of infrastructure projects such as highways, bridges, and certain hydroelectric power plants to reduce the current account deficit.
Moreover, the government has been seeking ways to curb the chronic trade imbalance by lowering dependence on energy imports. In the first seven months of 2023, the current account deficit reached 42.3 billion U.S. dollars, according to official data.
Emre Alkin, a professor of economy at Istanbul's Topkapi University, said 2024 could "greet us with a level above the uncertainties we have experienced so far." ■
