Turkey's inflation 'to fall in first quarter of 2018'

By Tuba Sahin

ANKARA

Turkey's annual inflation rate will drop 200 basis points in the first quarter of next year, according to the chief economic adviser to President Recep Tayyip Erdogan on Thursday.

"We may see a significant decrease of 200 basis points in inflation in the first quarter of 2018," Cemil Ertem said in an interview aired live on local broadcaster NTV.

Ertem said that those who had been trying to force the Central Bank to take "unnecessary actions" such as hiking interest rates would suffer the biggest harm themselves.

Credit expansion in the country's banking system did not have an inflationary effect, the adviser said, adding the volatility in foreign exchange rates would eventually be reduced.

"Volatility in forex in the last two weeks are speculative and due to non-economic reasons," Ertem said.

He projected the third quarter growth rate of Turkish economy to go up to double digits.

The country's annual inflation rose to 11.9 percent in October from 11.20 percent in September, according to a report from the Turkish Statistical Institute on Nov. 3.

On Oct.26, the Central Bank decided to keep short-term interest rates steady. The bank said in a statement that the one-week repo rate, also known as the bank's policy rate, was held at 8 percent.

The marginal funding and overnight borrowing rates were also unchanged at 9.25 and 7.25 percent, respectively.