CBRT Raised the 2021 Inflation Target

The CBRT raised the 2021 inflation target. The bank raised its inflation forecast from 12.2 percent to 14.1 percent.

Şahap Kavcıoğlu, Governor of the Central Bank of the Republic of Turkey (CBRT), announced the 3rd Inflation Report of the year. The Central Bank revised upwards its inflation forecast from 12.2 percent for the end of 2021 to 14.1 percent. While the Central Bank revised its inflation forecast from 7.5 percent to 7.8 percent for the end of 2022, the 2023 inflation forecast remained at 5 percent. In his speech, Kavcıoğlu stated that the growth in the second quarter will be quite high due to the base effect. Stating that the highest contribution to annual growth in Turkey in the first quarter came from the industry and service sectors, Governor Kavcıoğlu said, "Leading indicators show that economic activity maintained its strength in the second quarter... The gradual removal of epidemic measures supports economic activity." Kavcıoğlu stated that the fight against inflation should be done with a social consensus, "...inflation behavior has deteriorated, the CBRT has been left alone, coordination is needed... Everyone should internalize the fight against inflation. As the Central Bank, as the Ministry of Treasury and Finance, we are trying to fight. But chambers have a big role to play here. Companies should be more sensitive, we are asking them to raise their rate reasonably. These need to be balanced within themselves... Everyone should do their part. Inflation cannot be solved with monetary policy alone." Touching on the digital currency studies, the Governor of the CBRT stated that the studies continue intensively and said, "We will start the pilot implementation as in September."