Turkish Central Bank Governor Erdem Basci promised a year of modest interest rates and sustainable growth on Wednesday, comments that came after the Turkish Statistics Institute (TurkStat) reported that inflation continued its months-long rise in March.
“The central bank will continue to use all the tools in its arsenal to continue a policy of balanced growth,” Basci told reporters after a bank meeting in Ankara on Wednesday. Basci spoke of the need to reduce core inflation of around 5 percent by the end of the year, warning that rising inflation and a growing trade deficit could throw the economy into recession. TurkStat reported on Wednesday that annualized inflation in March was 7.29 percent.
“We're expecting inflation to fall by about five percent,” Basci said, although he didn't outline specific measures the bank was considering to rein in inflation. Whatever those measures are, they are likely to be the center of dispute with Economy Minister Zafer Caglayan, who has criticized the bank for an “overly cautious” policy as the economy slows. The economy grew just 2.2 percent over last year, TurkStat reported last week, a performance below expectations and a likely rallying cry for Caglayan and others who have called for lower interest rates.
Basci, meanwhile, said that the economy should be able to manage a 4 percent growth rate in 2013, despite a continuing economic crisis in Europe. New growth will happen as Turkey increases its ties with Asia and countries in other developing regions, the governor said.